The impact of Cost of Poor Quality on Project Management

Brunel University

School of Engineering and Design

The impact of Cost of Poor Quality on

Project Management

By

Daniel Jacobs

Supervisor: Dr Paul Naylor

September 2014

A dissertation submitted in partial fulfilment of the award of the degree of

Master of Science in Engineering Management.

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Abstract

This project evaluates current literature on project management philosophy, in particular the

Iron Triangle that is commonly used to describe the relationship of the three restrictive forces

in project management, namely Resources, Schedule and Scope.

Current literature has a rich source of information on quality approaches that are used in

intensively competitive industries (particularly automotive manufacturing) where commercial

need has driven innovation of quality approaches to develop leading quality philosophies

such as TPS (Toyota Production System), lean, six sigma and so forth. These methods and

philosophies enable companies to develop highly competitive delivery strategies that enable

them to deliver high value with maximum efficiency and a minimum of waste. The same

appreciation for the value of quality has yet to percolate to the construction industry. The

perception appears to exist within the construction industry that increases in quality would

result in additional expense and schedule impacts and not that increases in quality (meaning

an investment in the wider tools and benefits of quality management) would introduce

significant opportunities for benefits realisation for large project stakeholders.

This dissertation evaluates the current standing of quality within the construction industry and

proposes means by which the success of project management might be enhanced by the

adoption of more rigorous quality methods.

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CONTENTS

Contents ..................................................................................................................................... 2

1. Aims and Objectives ........................................................................................................... 4

1.1 Aim .............................................................................................................................. 4

1.2 Significance (Technical and Functional)..................................................................... 5

a. Delimitations of this dissertation .................................................................................. 11

2. Research Methodology ..................................................................................................... 12

2.1 Problem Statement .................................................................................................... 14

3. Literature Review – COPQ ............................................................................................... 15

3.1 The definition of the word “quality”. ........................................................................ 15

3.2 Cost of Quality (COQ) as applied to the Construction Industry ............................... 17

4.3 Cost of Poor Quality (COPQ) in construction .......................................................... 24

COPQ related to construction defects .............................................................................. 25

COPQ related to inefficiencies in the Project management process ................................ 33

4.4 Further work proposed regarding “quality” in this dissertation: ............................... 33

4. Research – Empirical findings .......................................................................................... 35

Questionnaire design, questions and target audience ........................................................... 35

Question design ................................................................................................................ 35

Target audience and response ........................................................................................... 35

Questions asked – and responses. ........................................................................................ 37

Research conclusion on Problem Statement ........................................................................ 59

6. Strategies for COPQ Reduction ........................................................................................ 60

6.1 Lessons Learnt........................................................................................................... 60

Why is the lessons learnt process important? ................................................................... 64

Suggestions for lessons implementation........................................................................... 65

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6.2 Manufacturing in construction .................................................................................. 67

6.3 Quality as an enabler ................................................................................................. 70

6.4 Quality as a strategy .................................................................................................. 72

6.5 “Lean” Construction .................................................................................................. 74

6.6 BIM (Building Information Modelling) .................................................................... 76

7. Conclusion ........................................................................................................................ 78

Conclusions of the research.................................................................................................. 78

Suggestions for further research ........................................................................................... 80

8. References ........................................................................................................................ 81

9. Appendix 1 – Questionnaire ............................................................................................. 87

10. List of Abbreviations .................................................................................................... 90

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1. AIMS AND OBJECTIVES

1.1 Aim

This dissertation’s main aim is to critically evaluate current project thinking around the Cost

of Poor Quality (COPQ) on large construction projects. This project will consider the

potential benefits that can be realised to project and construction management organisation if

they were to adopt a rigorous approach to the reduction of the Cost of Poor Quality on the

large projects that they run. This dissertation will evaluate current thinking on COPQ on large

construction projects as well as consider how other industries, in particular the automotive

industry, have reacted to initiatives to reduce the impacts of COPQ.

In addition this dissertation will consider what projects may gain with regard to cost and

schedule benefits. In addition this dissertation will evaluate whether improved project

performance in other areas could be gained with a re-evaluation of the quality strategy

deployed on projects.

The “Iron Triangle” of Cost-Time-Quality constraints that is popularly associated with

project management will come under scrutiny. Popular literature on the subject (within the

context of the construction industry) appears to describe a linear relationship between the

three different factors in that an increase in quality necessitates a corresponding increase in

schedule and cost to accommodate this. This is borne out by the anecdotal experience of the

researcher within the construction industry. Does an increase in quality result in increases in

cost and schedule? Evidence from the automotive industry would point at an inverse

relationship, namely that increases in quality reduce the schedule and cost of a product.

Would the same not apply to project management? This dissertation will evaluate whether a

new approach to quality within project management will lead to better schedule (and cost)

performance of large projects.

A reticence to invest in quality processes in techniques “to keep costs down” has been

observed, though this appears to be done without consideration (or apparent understanding)

of the potential benefits that this may deliver.

This dissertation explores the identification and analysis of poor quality on projects and aims

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to identify poor project quality - and its associated impacts to the construction industry -

through the Cost of Poor Quality (COPQ) methods proposed by Juran.

The dissertation describes the drivers for schedule performance of large construction projects.

(For the purposes of this dissertation large construction projects are those that are considered

to be in excess of £500 million).

Objectives:

1) Question the fundamental approach to construction project management – particularly

in relation to the understanding of Quality with the “Iron Triangle” of Time-Cost-

Quality. I.e. is the relationship a linear one in that an increase in quality results in an

increase in cost and schedule, or is there an inverse relationship between quality and

cost-schedule where an increase in quality results in a decrease to the cost and

schedule? (It should be noted that there is considerable uncertainty in what “quality”

means in regard to the iron triangle – this will be examined through further research in

this dissertation).

2) Evaluate whether an investment in a quality approach within project management will

deliver increased schedule performance.

3) Describe other possible “side-benefits” that a quality approach may have on projects

such as potential increases in safety, morale and prestige.

4) Investigate whether project management in the construction and petrochemical sectors

can benefit from a greater understanding and adoption of lean quality techniques as

commonly used in the automotive industry.

5) Gain a better understanding of what impacts particular drivers have in project

management.

6) Examine current industry best practice and further research currently being done

elsewhere

7) Provide suggestions for further research in the field of construction project

management

1.2 Significance (Technical and Functional)

The construction sector is a significant contributor to the UK economy and contributes in

excess of £83 billion annually to UK GDP. The construction skillset in the UK is also

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globally respected and the UK is a leading project management services provider to the rest

of the world. In addition the UK is host to a number is very large engineering consultancies

that deliver services to the construction and petrochemical industries across the globe. The

value of construction project management to the UK is thus well over £100 billion annually.

For many of these locally executed projects, and certainly for the greater majority of the

internationally executed projects there is stiff competition from similar engineering

companies in other parts of the world. To maintain Britain’s competitive edge it is critical

that the industry evaluates any means necessary to gain and maintain the differentiators that

drive clients to choose British firms and British execution centres to deliver their projects.

As such any initiatives that can further develop the state of the art of project management can

have a significant positive effect on this sector of the economy.

Through anecdotal observation the researcher is of the opinion that the infrastructure project

management techniques are some way behind those of other industries and significant step-

change advances may be possible if some of the techniques and philosophies of other

industry sectors are adopted within construction project management. An example of this

would be the lean processes adopted within the automotive industry that has led to significant

advances in the productivity of the automotive sector. The construction industry by

comparison has not adopted this rigorous approach to eliminating wastes and it is perceived

that significant opportunities to leverage learning from other industries exists within the

construction industry.

While a substantial amount of research has been done on the Cost of Poor Quality (COPQ) in

the manufacturing industries there appears to be little in the way of similar work for the

construction field. The “Iceberg” diagram of hidden costs is often described as the hidden

costs of poor quality related to manufacturing. However the presumption (to be borne out by

further research) is that this situation is at least as bad in the construction sector.

The understanding of COPQ in other industries has led to greater understanding of the

benefits of investing in quality upfront to prevent issues occurring versus those of dealing

with the disruption of quality failures once they have occurred. Estimates vary between eight

and twenty times that the COPQ amount exceeds the investment that might have prevented

(or mitigated) it. (This investment cost being known as Cost of Good Quality or COGQ).

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Why is this relevant?

There are many large projects that are successful, however there are also many large projects

that fail. Merrow (2011) states that megaprojects (those worth over $1 billion) tend to be

either very successful or abject failures with little in-between. Relating to the samples of

megaprojects that he was analysing (over 300 projects classified as megaprojects) Merrow

goes on to state that the 35 percent of projects that succeeded were genuinely excellent

projects. On average they underran their budgets by 2 percent while delivering highly

competitive (96% of industry average) cost. Merrow contrasts this with the failures where

failed projects had a 40 percent constant currency overrun, slipped execution schedules by an

average of 28 percent and averaged only 60 percent production in their first year.

Figure 1.2 is useful in understanding just how wrong a project can go. It should also be noted

that some recent projects that have experienced funding and completion challenges (such as

the Sakhalin 2, Kashagan and Sochi Olympics projects) are not included in this list and would

likely dwarf many of the projects listed here.

Figure 1.2. Sample of large project cost overruns - Flyvberg (2014)

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Flyvberg (2014) states that Measured by value, the size of infrastructure projects has grown

by 1.5% to 2.5% annually in real terms over the past century. Merrow (2011) in turn states

that a number of factors (such as competition, required economies of scale for project

viability and the resource demands of rapidly growing eastern economies) have converged to

ensure that megaprojects will be far more common now than what they once were. It would

thus appear as if megaprojects are here to stay, and that they are getting ever larger, more

common, complex and expensive. Given the spectacular failure rate of big projects, and the

fact that big projects are getting larger and more commonplace it is important to understand

what factors might be contributing to the success (or failure) or projects and what could be

done to mitigate for the factors that affect poor project delivery.

There are several “critical success factors” that contribute to project success or failure. Khan

and Spang (2011) list four categories of critical success factors that affect project outcomes.

The group these as a) Organisational Factors, b) Project Factors, c) People Factors and d)

National Factors. Whilst all of these factors cannot be controlled by project management

companies the organisation factors certainly can be. These are listed below, and are matched

to the relevant excerpts from the ISO 9001:2008 standard for a comparison against the quality

elements in a project organisation setup.

Critical Success Factor ISO 9001:2008 Quality Standard Equivalent

Risk Management 7.1 Planning of Product Realisation (implied)*

Communication 5.5.3 Internal Communication 7.2.3 Customer Communication

Sufficient Resources 5.4 Planning 6 Resource Management

Organisation Structure 5.5 Responsibility, authority and communication

Top Management Support 5.1 Management Commitment 5.6 Management Review

Effective Monitoring and Control 8.2 Monitoring and measurement

Effective Change Management 5.6 Management review

Organisation Maturity 5.4 Planning 6 Resource Management 7 Product Realisation

Figure 1.2.1 - Organisational Critical Success Factors compared to elements of the International Quality Standard. (Adapted from Khan and Spang (2011)). * It should be noted that the new ISO 9001:2015 will be a risk based quality management standard.

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It is against this understanding of quality within organisations that the concept of the Costs of

Poor Quality can be introduced. If these factors are not controlled well and quality failures

result then how do we understand the impacts of those Costs of Poor Quality. It would also

help to quantify what the actual COPQ values are in large projects. If the impacts are less

than one percent of TIC then they may well be deemed negligible in the greater scheme of the

project. This information for project management companies is sparse however, and the

nearest approximations can be made for companies in the manufacturing sector where this

phenomenon has been studied extensively.

Estimates on the impact of COPQ on company bottom line profits vary with common figures

shown as being around ten percent of costs being poor quality related.

Quality impacts:

1) Schedule – increased productivity through better coordination and active waste

elimination will allow better schedule performance to be achieved. This in turn

impacts:

2) Profits – through reduction in project expenses and elimination of COPQ costs. This

in turn impacts:

3) Company sustainability – as the company will be able to offer more competitive bids

than its competition. This in turn impacts:

4) Stakeholders (Society, clients, investors, employees, general public) – who get the

benefit of better value delivered for their money and reduced disruption due to

projects being delivered faster.

Those who will benefit:

The parties that will benefit from this research are:

Project Managers – will gain insight into the effects that robust quality management may

have on their projects.

Quality Managers – will gain a new appreciation for their responsibilities and potential

impacts within the world of large project management.

British Industry – Britain is a world leader in large project consultancy. Improvements in

the management of projects will further enhance Britain’s reputation as a project management

centre of excellence.

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Project Management clients – will gain benefits from projects that are better run, deliver

increased value for money and are completed sooner.

British society – If Britain’s project execution skills are further enhanced it would be

reasonable to expect that the industry would benefit from increased work as a result. This

would lead to further job opportunities as well as a growing number of persons contributing

revenue through tax receipts to Her Majesty’s government. Increases in contributions to the

national fiscus would have positive benefits to UK society as a whole as the government

would have additional funds to deliver better services to the British public.

Consideration for the novelty of different projects

Wembley football stadium is different to Heathrow Terminal 2 which again is wholly

different to Heathrow Terminal 5, and these projects again are different again to the

Kashagan petrochemical project in Kazakhstan or the Gorgon LNG (Liquefied Natural Gas)

project in Australia. It is the nature of projects to be different, so much so that Oisen in

Atkinson (2003) describes a project as a unique, one-off, complex task.

However, if we were to dismantle these “unique, one-off complex tasks” and compare the

elements that make up their work breakdown structure then there will be significant

similarities in the component parts of each of the projects. All of the projects, for example,

require piling, and all of the projects are dependent on getting concrete mixes right, the

correct material shipped from supplier yards in the correct order and made to the correct

specification. All of these projects, as diverse as they are, need to have taken heed of the

customer requirements and the particular challenges that can be faced in executing the

projects as well as the lessons and pitfalls that previous, similar projects have encountered.

All of these projects will need to have effective delivery strategies in place, be aware of what

is required to commission and bring into use their projects as well as manage project

challenges such as managing change and delivering the projects within complex, resource

constrained budgets. As such there are significant elements within project management and

execution that are common to large projects.

What this dissertation proposes is a greater understanding of some of pitfalls that occur on

large projects as well as the tools that should be employed in managing the “unique, one-off

complex tasks”. In so doing this dissertation will discuss elements and propose solutions to

provide a more robust method for delivering projects with better efficiency, less disruption

and increased success.

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a. Delimitations of this dissertation

This dissertation thesis is limited to the study of the Cost of Poor Quality impacts on project

management for large and super-large construction projects in the construction and

petrochemical sectors that are executed in the UK (note that this may mean that the project is

physically located either in the UK, or abroad, but the execution centre for the construction

(or construction management) is in the United Kingdom). For the purposes of this dissertation

a large construction project (also referred to as a megaproject in some literature) is deemed to

be a project where the TIC (Total Installed Cost) is over £500 million.

Projects within other fields, such as the development of a new motor vehicle model or roll out

of an IT system are not included in this dissertation, although work related to those fields and

tools developed for them are referenced in this dissertation.

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2. RESEARCH METHODOLOGY

Cresswell in Thomasson (2013) describes Quantitative research as “transferring information

into numbers and amounts and then conducting statistical analysis”.

Andersen in Thomasson (2013) describes Qualitative research as “methods words and the

researcher’s interpretation and perception of them is in focus”.

This dissertation will make use of both quantitative and qualitative research.

Figure 2.1 – The performed research process (Thomasson et al 2013).

Thomason et al (2013) above describes the research process as a parallel activity where the

theoretical study (the literature review) is conducted in parallel with the empirical research.

The theoretical study informs what the empirical study should target. It may be that some

aspect of an issue is covered in detail in the literature, and that there is scant (or outdated)

information on another aspect and this then, if it follows the premise of the research, may

provide a good direction for the empirical research to follow. Initial research should be based

on the existing information available and later on in the dissertation, once the extent of

knowledge in literature is clear, that the theoretical analysis and the empirical study should be

done in conjunction with one another. This will help ensure that the empirical study questions

are best directed to investigate gaps in the common understanding.

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This dissertation will make use of both theoretical (Qualitative) and empirical (Quantitative)

study as described in Figure 2.1. Theoretical study will help shape the direction of the

empirical study with data analysis performed at the end for the projects to examine whether

there is support demonstrated for the dissertation hypotheses.

The literature review will examine current information that is available in;

• The Brunel University library,

• Industry journals (those not available on the library website),

• Publications by industry specific bodies such as the CIRIA and CII,

• Company internal information such as procedures, databases and go-bys and

• Previous studies done at other education institutions

At this stage it is envisaged that the qualitative study will include:

- Analysis of current literature on “Cost of Quality”, in particular with reference to the

construction industry, and with the view to equate cost of poor quality with impacts to

schedule performance.

- Analysis of current literature on lean efforts in construction - so called “lean

construction”.

- Analysis of current literature on quality initiatives in industries where quality is

perceived to have a higher level of uptake (such as the automotive industry).

- Analysis of the tools available to the construction management industry to reduce or

mitigate for quality failures, and thus to enable projects to be better run.

The qualitative study will be done by means of questionnaires issued to construction industry

professionals through an online survey tool. The questions posed will be determined through

literature review and intended to support the examination of information that will

demonstrate support for, or against the research’s stated hypotheses.

The research will also gauge the responses between levels of construction industry

professionals so that responses between those in senior posts can be compared to those in

lower organisational posts. This may reveal whether there is any disconnect between senior

management and the rank-and-file of construction company staff.

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2.1 Problem Statement

Based on observation and initial review of literature the following problem statement has

been developed for this dissertation.

Problem:

The understanding of Cost of Poor Quality (COPQ) as it relates to Project Management in

large construction projects is poor. The Cost of Poor Quality (COPQ) impacts on large

construction projects are significant. (Significant impacts are considered those that have the

potential to put one or more of the completion parameters of the project in jeopardy – these

parameters being one or more of scheduled finish date, functionality, profit, safety record

etc). A better understanding of how the Cost of Poor Quality impacts the project management

of large construction projects will lead to better project management and more robust

delivery of projects.

Impact

If knowledge of the COPQ is poor then knowledge of its impacts and the actions required to

reduce it are also poor. This would result in unnecessary wastage in projects that result in

delay, poor project delivery, and negative impacts to project clients, project employees, wider

project stakeholders and project management companies. These negative impacts could be

any or all of; loss of revenue, loss of prestige, safety incidents (through unsafe situations

arising as a result of poor project management) and cancellation and delay to projects that

might otherwise have been successfully delivered.

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3. LITERATURE REVIEW – COPQ

3.1 The definition of the word “quality”.

The ISO 8402-1986 standard defines quality as "the totality of features and characteristics of

a product or service that bears its ability to satisfy stated or implied needs."

Wiezel et al (2013) describe project management as; “the discipline of planning, organising

and allocating resources to bring about successful completion of project goals and objectives

while honouring project constraints”. Understanding these two definitions then demonstrate

support for Wiezel et al (2013) who also define project success as; “the satisfaction of

stakeholder needs measured by the success criteria being identified and agreed upon at the

start of the project”. (It should be noted that the term “stakeholder” is a broad term and

thereby includes the project delivery company).

Project management literature describes the “iron triangle” where three factors are presented

at the corners of triangles and these three commonly being either cost, time and scope (with

quality in the centre of the circle); or as variation cost, time and quality.

Figure 3a - Different interpretations of “Iron Triangle” from left Atkinson (1999) and

Ambler (2005).

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When considered as part of either triangle variant however there may be confusion as to what

interpretation should be assigned to the word “quality”. The inference with the triangle

demonstrations are that there is a restriction on quality in that increases in time, cost,

schedule or scope are required for an increase in quality. This is at odds with the definitions

described at the beginning of this chapter in that quality is described as “fulfilling the stated

or implied needs” of its stakeholders. Projects should thus, at their outset, be set up to deliver

the stated or implied needs of their stakeholders and the necessary resources (including

personnel, knowledge and other investment required) made available to facilitate project

success.

Quality, whilst being understood as the discrete (or implied) specification that a project

should meet, should also be understood as a set of tools, techniques and philosophies that

enable companies to better meet their stakeholders requirements. This may require a

paradigm shift in project management understanding of what quality is and what it has to

offer.

Seawright (1996) describes different facets of quality (shown in figure 3.1) and these have

been adapted by the researcher for possible application to the construction industry.

Seawright et al (1996) describe seven major categories of definitions of quality: transcendent,

manufacturing-based, product-based, user based, value-based, multidimensional, and

strategic.

No Quality Category

(from Seawright)

Definitions from

Seawright (1996)

Application to construction

1 Transcendent Condition of overall excellence Condition of overall excellence, including

the delivery techniques used in the project

2 Manufacturing Based Production (in a factory) in

conformance with objective

design specifications

Production (in a factory) in conformance

with objective design specifications, as

well as on—site delivery of manufactured

and assembled product.

3 Product based Various definitions related to

durability, reliability

serviceability.

Quality of components manufactured

offsite such as bolts, concrete mix and

structural steel elements.

4 User based “Fitness for use” in general this

term refers to the user

experience of the product

supplied.

In construction – the experience/

perception of construction staff of a

product, process or service.

After construction – the building user’s

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experience of the project as executed by

the construction company – i.e. how well

the building meets its stated or implied

requirements.

5 Value based Customer satisfaction (user

based quality) considered in

conjunction with price.

Customer satisfaction (user based quality)

considered in conjunction with price. Price

may include the operational expenses

(Opex) of a finished building – a well

designed and built building would tend to

have lower Opex than a poorly built one.

6 Multidimensional Where multiple aspects of

quality are considered – (e.g.

Parasurnam (et al) in Seawright

(1996) describe 5 aspects of

service quality: tangibles,

reliability responsiveness,

assurance, empathy).

Delivery of a construction project that

meets both the objective quality

requirements (such as conformance to

delivery requirements, operability,

maintainability etc), as well as the

subjective quality requirements (such as

aesthetic appeal and client experience)

7 Strategic Where a company gains a

competitive advantage through

the robust application of quality

methods, as described by Porter

in Seawright (1996) as; “one

way to differentiate a product

from its competitors, potentially

providing the producing firm

with a sustainable competitive

advantage that allows it to earn

above average profits”

Where a company gains a competitive

advantage through the robust application

of quality methods, including the use of

quality techniques to deliver projects

ahead of the schedule that its competitors

may be able to provide.

Figure 3.1 Adapted from Seawright (1996)

3.2 Cost of Quality (COQ) as applied to the Construction Industry

Tumala (2002) states that Juran introduced the concept of Cost of Poor Quality (COPQ) as a

means for quality departments to highlight their quality programs to management. Whilst this

is an admirable initiative it does imply that this (COPQ) is something that management are

entirely unaware of. It may well be the case that management’s understanding of quality, it’s

benefits and the impacts of not managing and resourcing it properly is misunderstood. It is

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beyond the remit of this dissertation to evaluate why that might be the case. It would appear

from popular literature however, that the value of a well-managed quality program has been

recognised and fully adopted by the world’s leading automotive companies, not just as a

means to reduce defects, but as a means for the company to differentiate itself from their

competition through the strategic application of quality techniques in their organisations to

drive real delivery value. The Toyota Company is the classic example where a company is

using quality techniques - the “TPS” (Toyota Production System) - to gain significant

advantage (in terms of operational leverage as an efficient business entity) over its peers. The

TPS system is now well studied and its techniques are applied to a broad range of industries

well beyond the original automotive intent. Its application to the world of construction project

management has, hitherto, been limited however.

Crosby (1979, 1984) in Tummala et al (2002) states that: COPQ is “everything that would

not have to be done if everything were done right”. Tummala goes on to state that COPQ is

the price of non-conformance, and sees non-conformance as a bacteria that must be treated

with antibodies to prevent problems from recurring.

Whilst treating causes of non-conformance is certainly one way to reduce costs Crosby does

not imply that prevention is better than cure, but appears to endorse the belief that the

nonconformities that constitute the COPQ should first occur before they are mitigated for. A

far more efficient approach would be to assess the risks of non-conformance occurring (i.e.

attempt to anticipate their occurrence ahead of the issues arising) and then implementing

measures to ensure that they don’t occur. This would be moving from a reactive quality

mentality where a COPQ arises and is then fixed, to one of where risks are judged ahead of

events occurring and then measures are implemented to prevent the COPQ arising in the first

place.

This approach of risk-based quality management would be in keeping with the soon to be

released version of the ISO 9001 quality management system standard. The major change

with ISO 9001:2015 is that it will adopt a risk based approach and it would thus be in keeping

with anticipating the issues that may affect a business and have the business mitigate them

before they occur.

The CQI – Chartered Quality Institute - (2014) has published some guidance on the new 2015

Quality Management System (QMS) standard. The CQI state that “Risk-based thinking is

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about demonstrating that you understand the risks to your QMS and its constituent processes

which might affect your ability to achieve your intended outcomes”. It would appear as if the

CQI’s greater focus is on managing risks to a company’s quality management system rather

than the risks to project delivery and stakeholder satisfaction. (Stakeholder satisfaction is

used here rather than “customer satisfaction” as stakeholders would include customers, but

also all of the company’s other stakeholders such as the shareholders, employees,

governments and so forth. By looking at all stakeholder interests it implies a more sustainable

approach to business management rather than just purely focussing on customer satisfaction).

Thus, to manage risks fully it would appear as if two separate risk approaches are required,

one to manage the specific risks to a particular project and the other to manage the corporate

risks of a company’s management system.

Why is COPQ important?

Naidish (2000) states that: “Quality Authorities” estimate that COPQ to 20-40% of gross

sales for manufacturing and service companies - though no reference to these studies is

given. He goes on to state that: Independent studies made over the last 30 years have verified

this loss… yet two-thirds of executives believed that that company COPQ was less than 5%,

or just don’t know what it is.

Naidish goes on to state that companies that reduce COPQ to 10% of sales would double

profits for most companies without additional investment from the company. This is due to

the fact that COPQ detract directly from the company bottom line, and if margins are tight

then the profit margin could be very small compared to the percentage margin lost to COPQ.

Given that COPQ directly affects the company bottom line, any means to reduce it will have

a direct effect on company business results.

This alludes to a powerful differentiator that astute companies can employ on their behalf

when bidding for new project works. With ever increasing competition for large projects, and

with securing work being contingent on submitting competitive bids, it is becoming

increasingly important for project management companies to be able to submit competitive

bids to secure future work. The companies that have efficient means of project delivery and

who look for innovative ways to improve their delivery through understanding, managing and

reducing the impacts of wastage are the companies that are more likely to make a success of

the work that they win.

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Juran’s research into “Cost of Quality” stated that quality will cost either through the

investment required to prevent quality failures occurring (cost of good quality), or through

accepting the cost of poor quality (COPQ) when failures occur.

Figure 3.2 - Juran’s cost of quality model (1988).

Goble et al (1993) quote the American quality guru Philip Crosby’s statement that “Quality is

free”. Juran’s model above where he spells out two types of costs of quality appears at first to

conflict with Crosby’s statement. Crosby however, is referring to the notion that an

investment in the costs of good quality (i.e. the willingness to pay for prevention and

appraisal costs) will be far more worthwhile than not making the investment and thus living

with the expenses that will occur due to the costs of poor quality.

Juran also introduced the concept of having an optimum level of quality investment, namely

that where the there is an intersection of the cost of poor quality and the cost of good quality.

There would thus be a point of intersection where any increase in prevention costs may result

in an increase in overall costs again as per figure 3.3 below.

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Figure 3.3 – Juran’s Optimum Quality Costs Model

This model, however, does not take into account;

� The transient nature of projects with the introduction of new scope within a

construction project (such as moving from piling works to assembling precast

concrete columns). The introduction of these new situations may result in a period of

flux while the control systems (persons, methods and machinery controls) become

familiar with the new scope of work. There may thus be a greater occurrence of

defective works in the early part of a particular scope delivery but the consistent

application of preventive cost will reduce this over time. (i.e. COPQ may reduce with

a steady application of preventive cost over time).

� The nature of projects where the critical path is in place. Within the narrow work

scope for an element it may be that the cost of prevention is seen as an increase but

for the overall scope the extra investment may be worthwhile – particularly if critical

path pressure is reduced. The application of prevention and appraisal cost should thus

be seen in the big picture of the finished project as a whole, not just individual narrow

work scopes.

� Learning in subsequent projects. Should a company be a learning organisation –

where it takes on board knowledge and turns it into wisdom (see figure 6.1) then it

should not be encountering the same issue on project after project. It may be that a

high cost of prevention and appraisal should be applied – where an element of

organisational learning cost is incurred as part of prevention – so that subsequent

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projects benefit from the lesson learnt.

� The COPQ initiatives should also be seen from the perspective of the wider business

benefits that could accrue with having sustained higher quality due to positive impacts

on downstream project elements. These benefits in turn could include winning more

work and the business being financially more stable. Thus, the “optimum” point for

cost of poor quality from a business point of view may well be with a higher

prevention cost in place than the optimum that Juran describes in Figure 3.3.

The challenge with the construction industry is that large projects often have a lifecycle of

around five years, and sometimes more. With companies submitting annual budgets and

annual profit and loss statements there would appear to be the tendency to look at business

costs on an annual cycle, rather than considering the whole project lifecycle. The “cost of

good quality” is most often associated with the costs of assuring that early design work,

supplier selection and rigorous construction methods are agreed and in place ahead the bulk

of major construction works. The costs of poor quality however, typically arise late in the

project lifecycle when the issues that were not resolved early in the project manifest

themselves as defects that require management (either through concession or rework).

Projects nearing completion typically have significant cost and schedule pressure so the

tendency may be that further cuts are made and that the appetite to facilitate quality in the

remaining delivery is reduced leading to a spiralling issue with poorer quality as the

completion schedule looms. The cost of good quality then, is an early cost in the project and

highly visible in the form of resource costs and the cost of poor quality largely arise later in

the project lifecycle and are, at first glance not as visible and may well be “hidden” costs that

require investigation to quantify.

It may be that the short term view is what focuses management attention due to its visibility,

however it is the long term view that most affects bottom line.

Costs of poor quality can further be broken down into “visible” and “less visible” costs as

described by the so called iceberg model shown in Figure 3.

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Figure 3.4. Visible and Less visible quality failure costs. Costs above the line are easily

quantifiable whilst those below the line are severe impacts but less visibly tied to the actual

failure event.(Lulla 2014).

Tummala (2002) states a traditional challenge with quantifying COPQ is the “difficulty of

tracing the root causes of resource consumption from the reported cost data by employing the

traditional costing systems”. This can be evidenced by the typical setup of project reporting

where the Work Breakdown Structure (WBS) is set up so that COPQ events are not shown as

discrete elements but are included in the WBS costs. Thus, for COPQ to be managed robustly

a cost management system that allows for COPQ costing should be implemented on projects

– as well as the willingness of individuals to use the data in an open and honest manner. Only

once this is fully in place (this may well be a culture shock for many in project management)

will COPQ be more accurately quantified. In the meantime however, much can be done to

ensure that the major elements that inflate COPQ are addressed.

What is clear from the construction process is that COPQ has a significant knock-on effect to

follow-on works as the construction programme typically does not have much flexibility

beyond the critical path. This means that a relatively small hold-up can have a

disproportionately large effect on follow-on works that the full impact of COPQ can be

particularly hard to quantify. (The contractual nature of construction projects can also mean

that these disruptions end up in expensive and protracted disputes requiring arbitration and

litigation to resolve).

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There appears to be little appreciation of “Cost of Quality” in the construction sector, quality

failures are seen as part of the job costs and little emphasis is given on preventing quality

failures occurring as the only numbers considered are the investment costs of prevention

without considering the returns of the programme. There is also a tendency in some

construction companies to deliver a project “to the rile” against what a contract stipulates and

if any specific measures regarding quality are not included then it is simply omitted as a

“cost-saving feature” rather than considering whether the company would benefit from the

quality initiative.

COPQ constitutes a significant impact on bottom line income and estimates vary on how

much this actually is.

Figure 3.5 – COPQ as estimate of sales (Defeo 2005)

4.3 Cost of Poor Quality (COPQ) in construction

The Cost of Poor Quality in Construction could be divided into two main areas;

a) The COPQ associated with the resolution of a defect (i.e. rework).

b) The COPQ associated with poor project management (i.e. inefficiencies).

Whilst inefficiencies are routinely described as quality failures within the automotive

industry (Gao and Low (2014)) they are not recognised as quality failures within the

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construction industry. The recognition of this as an issue for construction project

management is key to the development of techniques to prevent or mitigate the issues.

COPQ related to construction defects

Managing COPQ requires understanding and recognition of what the potential COPQ issues

are that occur. Costs and delays that are routinely incurred on construction projects may not

be recognised as costs of poor quality and may thus not be addressed as such. Recognition of

these costs is an important step in understanding;

a) That elimination (or at the very least mitigation) for them is possible

b) What actions can be taken to mitigate for them.

It should be noted that the list described below are the on-site cost impacts to the project and

does not consider the root cause(s) of what these costs may be. The list below is not

exhaustive but is a list of COPQ that the researcher has witnessed on recent large

construction sites.

The costs of poor quality (COPQ) in construction could include any of or multiples of the

costs listed below. The assumption has been made that costs of delays as a result of quality

failures are also included in the COPQ estimates below (in essence, the “opportunity cost” of

a COPQ event).

1) Hire of construction plant – for longer than is planned. A defined budget for hire of

construction plant would have been established for a given project. If the project

overruns its schedule then the cost of the hire of the plant would be a direct overhead

that was unbudgeted. There would be additional hidden costs with the requirement for

management to negotiate longer leases on certain plant, as well as the site enabling

teams (those responsible for the provision and maintenance of construction plant) to

determine what equipment is required for the remainder of the project.

2) Overtime rates staff to fix works. When a project is running late, or has an issue that

needs to be reworked - particularly if this issue is on the critical path - then the project

may need to spend extra hours on having the personnel present on the project to do

the works. This is often at an overtime rate where time over the normal contracted

hours is at 1.5 times the normal staff hourly rate, or even 2x if it falls on certain days

like Sundays and Bank holidays. In Hanna et al (2004) productivity is defined as “the

ratio of total input of resources to total output of product”. The project may also suffer

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additional cost in that the productivity of workers tails off the longer that they work.

Hanna et al (2004) in a study of overtime productivity for mechanical and electrical

fit-out contractors on construction projects in the United States – trades typically

affected by rework - state that the contractors lose between one to sixty percent

productivity depending on the type and extent of overtime worked. The extent to

which productivity is affected by overtime in the European Union may be curtailed to

some extent by EU regulations such as the Working Time Directive that can apply

limits to how many hours may be worked on average per week over a given number

of weeks (The Health and Safety Executive (HSE) 2014).

The project may need to pay for additional welfare elements such as providing meals

for overtime staff and accommodation and other welfare arrangements.

3) Material required to complete works – this cost would include the building material

required as well as the management time to procure the material and the logistics

elements of handling, transporting and storing the material.

4) Professional support costs such as Health and Safety management to do bespoke risk

assessments. As rework can often be beyond the scope of the standard works process

there may be the requirement for bespoke activities to be performed by an

organisation to satisfy the requirements of the defect resolution event. (An example

could be the method-statement and risk assessment required for the replacement of a

reactor in a petrochemical plant, which would not have been necessary if the works

were done to satisfaction in the first place).

5) Undoing of completed works to access rework. Good projects should have a

workflow process laid out so that as much of the work as possible is standardised.

Koskela (1992) in Pheng (2005) describes the value in the reduction of variability as

simplifying the number of parts and steps. Standardised works should be easier to

adopt as the company systems would then be better equipped to deal with any

particular issue that arises. In rework however, the works are very often non-standard

works. As an example a section of construction scope, such as the installation of

glazing panels would have a defined method statement and risk assessment (RAMS)

for the installation of their works. If a defect with the installation is found that

requires replacement then a new RAMS would be required for the elements that need

to be replaced.

It is likely that no method-statement/risk assessment would likely be written for the

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rework when it occurs. As rework can be very tricky a project manager would need to

ensure that the works are specifically assessed to ensure that the planned works are

safe and that the rework is feasible (i.e. that the works planned will fix the defect

without creating greater problems). This assessment may require the specific

assessment of suitability by engineers to determine if the rework can be conducted

safely and whether the proposed solutions are feasible. The perception is often that

rework is twice the amount of normal work, however the reality is often far in excess

of this. (As an example - rework often entails; that the work is done (incorrectly), it

then needs to be undone, and then redone correctly. This is thus clearly more than

twice the amount of work required to do it correctly the first time). As the works are

often in complex already built up areas it often entails the unproductive occupation of

a company’s more experienced persons in the resolution of the particular issue.

(Management around rework is often complex too as the Health and Safety

requirements are often non-standard – see point 4 above).

6) Logistics costs such as transport and storage would increase. Large construction sites

often require complex logistics arrangements such as lay-down areas and the

administration of material to keep construction on track. Building a large and complex

project often entails keeping track of the logistics of material being sourced from

around the globe with varying lead times and surety of delivery times (i.ee. the

confidence that the project may have in its timely arrival). If a project is delayed – or

if rework is required – then the additional work would put further burden on the

logistics arrangements of the project.

7) Supervision costs – on site supervision will be required for extended periods of time

as the works are ongoing. Supervisors tend to be significant cost burdens on their

project as they are expensive compared to labour, and the nature of the work that they

are involved in (supervision) often means that they are not as productive as what an

actively operating tradesperson might be. (i.e. their work is supervision, not

construction).

8) Management time (from the construction company) used to investigate what went

wrong and what should be done in remediation. Where a significant defect occurs it

would be expected that a Root Cause Analysis (RCA) into the event is conducted to

determine how the issue came to occur in the first place. This investigation will

require further assessment of the events that led to the defect occurring, and this

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entails further delay and non-productive use of construction team members’ time. The

evaluation of the proposed “corrective action” may need to be done by competent

engineers and involve further time in amending the factors that contributed to the

defect occurring.

9) Management time (from the construction company) used to manage client

expectations with regard to the rework completion. Company leaders that would

normally be busy winning new work for the company or improving a company’s

management systems would find themselves tied up in “fighting fires” with the client.

This time would be spent largely providing reassurance of what the construction

activities are that are that will be remediating the issue that has gone wrong. This is

highly unproductive time for company leadership, and apart from affecting morale for

the individuals concerned it is negating senior leadership from moving the company

forward. This time is not often considered in the project makeup, it would often be

considered “part of the job” for a company manager to get involved in and so this cost

to the company (and its associated opportunity cost) would be lost.

10) Impacts in COCE (cost of capital employed) as working capital is tied up in building

projects longer and milestone payments – or final settlement is delayed. In many

contracts there are payment events tied to achieving certain construction milestones.

These milestone are typically set by the client and may stipulate that a certain

payment if due when a particular system comes on line or operates for a period of

time at a specified rated capacity. When defects occur and these milestones are not

met then the contractor is saddled with the ongoing expense of resolving what the

particular issue is, as well as potentially missing out on payment milestones

(especially if the payment milestones are contingent on achieving a specified element

of satisfactorily completed construction scope by a given date.

11) Support works such as administrative/canteen/security to keep site operational,

12) Loss to client of having building availability (such as delayed income from rents as

tenants moving in is delayed). This is a classic manifestation of a “loss to society” as

described by Taguchi in Lofthouse (1999). Lofthouse states that Taguchi defines

quality in a negative manner as "the loss imparted to society from the time the

product is shipped". In the case of construction the researcher proposes that could be

understood to mean “the loss imparted to society until the project is complete”.

13) Loss of client goodwill – resulting in possible loss of future works

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14) Liability insurance costs to fix difficult works. Insurers would have schedules and

tables for standard work rates and they would be able to develop a cost quote for

standard works without too much further assessment required. If a large defect event

occurs however, the insurers may need to do a detailed engineering assessment of the

proposed works, something that the contractor would have to pay for.

15) Assessment costs such as having Quantity Surveyors survey required works,

16) Damage to existing good works during remediation works of other defects (e.g.

completed ceilings that need to be taken down to repair defective services).

17) Loss of goodwill to society (societal impacts) such as the blight of having hoardings

up and dump trucks using roads for longer than they might have needed to. Societal

impacts would also include the unavailability of employment in the local community

that unfinished projects lead to. In some cases (such as late completion of schools and

hospitals) the societal impacts may be significant on the service users of those

facilities.

18) Rent of temporary spaces such as construction site offices that continue for longer

than what was necessary with timeous project completion.

19) Loss of income through legal implications of finishing late. A project that over-runs

may face litigation costs for over-running planned finish dates. The litigation could be

for the loss of use to its owner (such as missed profits to the operator of the asset).

The contractor doing the building work may also lose any completion bonuses that

20) Societal loss of not having facilities available to use on time (or impacts from having

rework ongoing behind hoardings in opened but partially completed facilities),

21) Loss to industry of having competent construction staff held back to finish over-

running projects (i.e. the next projects suffer due to lack of staff availability)

22) Safety impacts may arise (and subsequent costs) as rework in construction is done out

of sequence of normal assessed method statements. The nature of rework also means

that sometimes it is impossible to replicate the works in situ that would have been

done in a controlled environment in a factory (e.g. paint touch up on steel), Manuele

(1997) in Rajendran 2012 “concluded that the word quality is interchangeable with

the word safety”. Whilst Manuele was writing in relation to the construction industry

it would be worth considering an automotive example to underline the point; the

quality of a motor vehicle’s brakes has a direct bearing on the safe operation of that

vehicle. Quality then, could be considered as Operational Safety. Manuele’s example

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though, requires further clarification. Should a person be injured during the

installation of an element of work then that matter is primarily an Occupational

Health and Safety issue – during investigation it may be found that the root cause is a

quality failure, such as poor installation method, poor design or faulty component.

Occupational health and Safety deals primarily with the human behavioural aspects of

the construction activity.

Should a person be injured after completion of the work (such as when a ceiling

collapses on a member of the public) then that is wholly a quality issue.

This matter can be further examined by considering the health and safety impacts to

the maintenance of a poorly constructed building to that of a well-constructed one. It

could be assumed that the lifetime “human cost” (that being the total injury toll

sustained during the maintenance of the building during its useful lifetime would be

far less for a quality building than that building which isn’t a “quality” building. Poor

quality building in essence, could expose maintenance persons to higher risk than

what a quality project might have done. (The Construction and Design Management

(CDM) Regulations are intended to force building designed to consider the

maintenance and operational needs of the buildings and to quantify – and mitigate –

the “residual risks” that are left in the building).

In Rajendran (2012) Zurich Corp (2011) state that;

“Similar to safety management, it is critical to convince upper management and other

stakeholders of the benefits of quality management, which are many;

• Better safety performance;

• Reduces project costs and time to complete

• Reduces potential for construction defect claims and warranty call backs

• Increases owner satisfaction

• Reinforces positive behaviours and accomplishment for project team members

• Creates a high-performance team atmosphere

• Promotes a zero-rework goal

• Minimises rework and punch lists

• Promotes a culture of continuous improvement

• Reduces the cost of the contractor or owner’s insurance resulting in a

competitive advantage over their competitors”

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23) Reduction in warranty periods – increasing liability for the construction company.

(e.g. construction companies are liable for system warranties from the time of

handover/acceptance of the works. Product warranties however, start when these

products arrive on site during construction phase. The bigger the delta between

installation (start of product warranty period) and construction handover (system

warranty period) the greater the liability for the construction company. Some building

types (such as power plants and oil refineries) require a period of sustained productive

running with a minimum output level and strict limits to what downtime the plant can

experience in that time. This has to be achieved before the project is deemed complete

and handed over to the client. Should there be failures in this cycle then (depending

on the contract) the time resets to zero and the contracting company has to start the

trial run period again – all the while incurring warranty liabilities for the components

that have been installed that might have been the client’s responsibility to manage.

24) Waiting time – as rework is done out of sequence there is inevitable disruption to a

construction programme and certain works that would have been planned for a time

are suspended while the rework is done. This results in planned resource not being

able to be utilised productively and needless waiting occurring. The potential scale of

waiting time impacts is significant. Flyvberg (2014) states if the London Crossrail

project would lose £3.3 million per day that if any delays were to be incurred (a figure

of £1.2 billion for each year should it overrun its planned completion date by that

length of time).

25) Increased insurance costs for defect claims. Rajendran (2012) states that

A construction defect claim is any claim for property damage that is progressive in

nature, and arises out of the construction of any project and occurs after construction

operations have been completed. Defect claims are expensive. The U.S. insurance

industry pays more than $5 billion annually to settle construction defect claims

(Zurich Corp., 2011). This is approximately 0.5% of the value of the U.S. construction

market, which was estimated to be slightly less than $1 trillion in 2010 (USCB, 2011).

To put this into perspective, the average owner pays an additional ½ percent of every

construction dollar to pay for construction defect claims and to bring their projects

into conformance with project requirements.

As insurers often pick up the financial brunt of poor workmanship claims there is a

rising interest from underwriters in reducing the likelihood of serious construction

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defects occurring. An additional point of revenue for a construction company would

be the savings over time in cheaper insurance premiums if the company manages to

reduce its number of claims.

26) Staff turnover – Staff working on a project may be disillusioned with a project that is

seen to be failing and may seek alternate work rather than stay and work through what

would be seen as a failure. Staff on projects – particularly contract staff – would likely

have other roles up in accordance with the project’s contracted finish date. If the date

slips beyond this then the contract staff would be inclined to leave their current works

to move onto a new project that offers longer term employment, and a greater sense of

reward (as the new project may not be in the defect resolution stage). The project that

has the issues to deal with would then also face the challenge of losing the staff that

would have been best placed to resolve the issue as they would have been most likely

to have the best level of detail on the causes of the issue.

Staff morale may also suffer if the project is seen to be in delay and a large number of

issues to resolve. This may in turn affect morale and productivity may be jeopardised

as a result.

27) Business value impacts. Significant delays to mega projects, particularly those that

have media coverage or where stock market updates are required can have a

significant impact on the stock price of a company (and hence the market

capitalisation) of a company. Huband (2014) reported that a large oilfield engineering

services firm announced delays to a key project. This announcement resulted in a

share price drop of over fifteen percent in one day for the company. At time of writing

this dissertation the share price had not yet recovered to its pre-announcement levels.

(For a multi-billion pound company this is a significant loss of market value).

Understanding the Cost of Quality and the significant impacts that COPQ can have on a

project presents an opportunity for construction firms to deliver projects faster, cheaper and

with increased profit and this dissertation will evaluate whether a new approach to quality

within project management will lead to better schedule (and cost) performance of large

projects.

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COPQ related to inefficiencies in the Project management process

The Oxford dictionary of business and management describes Shingo’s seven wastes as:

1) Defects

2) Overproduction – make only what is needed now

3) Transportation

4) Waiting

5) Inventory

6) Motion

7) Processing (Over-processing)

Based on the researcher’s experience with the construction industry the primary use for

quality in construction currently appears to be the resolution of defect management, and not

as an aid in driving efficiency. Related to Shingo’s wastes above the first, namely “Defects”

would thus be seen by most construction professionals as a quality issue, however wastes 2 -

7 above may not necessarily be seen as quality issues (or indeed as wastes at all) within the


4.4 Further work proposed regarding “quality” in this dissertation:

Further work in this dissertation will include the evaluation of the understanding of the word

“quality” and how it applies to construction. The current use of the term can often be used in

a somewhat nebulous context and further definition, through the evaluation of current

literature on the topic, will help develop the understanding of the different facets of quality

through the delivery stages of a project. This will also include the competencies and toolsets

required to leverage the different quality aspects properly. As an example, the competencies

and toolset required for manufacturing quality (such as Statistical Process Control (SPC),

Measurement Systems Analysis (MSA) and Root Cause Analysis (RCA) would be different

to the application of quality in the strategic sense where project leaders would be required to

have a greater sense of Management Systems, industrial psychology and organisational

dynamics).

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Mikkelsen (1990) in Quality of Project Work and Project Management describes a “Quality

Pathway” where quality is applied to the different stages and facets of a project.

Figure 4.4 Mikkelsen (1990) – Quality Pathway in projects

Mikkelsen describes the different aspects of quality as applied to different elements of the

project, and whilst an understanding of the different aspects of assurance across the project

lifecycle is key to the understanding of the delivery of an assured project, the diagram does

not explain how quality would be applied as a strategic driver in the project. This approach is

symptomatic of quality having a “siloed approach” where different approaches are used in

different aspects of the project but there is no coordinated and pro-active approach from the

project leadership to use quality as a delivery strategy. Some twenty five years on from

Mikkelsen’s work the methods and approach to quality on large construction projects appear

to still be much the same.

The detailed evaluation of the understanding of quality is required to properly support the

premise of the research. Without the full view of quality and the varying ways in which it is

applied at the different stages of a project the potential benefits of a quality investment - and

the means as to how this could be achieved - may be lost.

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4. RESEARCH – EMPIRICAL FINDINGS

Questionnaire design, questions and target audience

The survey was conducted using the online survey tool www.surveymonkey.com. This

facility allowed the compilation of questions in a variety of ways with a flexible approach to

question design. The SurveyMonkey website also allows the compilation of the responses

and display of the results in a variety of available methods. The website provides full

anonymisation of responses and also allows each respondents answer sheet to be evaluated

individually. It maintains anonymisation by recording individual respondents as “Respondent

1”, “Respondent 2” and so forth. This is useful in the further comparison of, for instance, the

response of directors against a certain question versus those by engineers. In this way any

difference in trend could be analysed.

Question design

The questions were designed to with the problem statement in mind. Questions were

formulated to test the different aspects of the problem statement and also to provide some

sense of calibration of the questions themselves (within the questionnaire some questions

may be asked more than once to test responses). The questions themselves were drawn up

from elements within quality and project management and covered the “Seven wastes of

Lean”, the “Quality Maturity Model”, Lessons Learned as well as the general understanding

and approach to cost of poor quality in the construction industry.

Target audience and response

The target audience is senior managers and knowledge workers (particularly those with

technical and technically oriented management roles) such as project managers and project

directors, construction managers, engineers and project oriented quality managers. Only

persons who have worked (or who are still working on) large construction projects were be

polled.

As the responses to the questions could be seen to be inflammatory if read out of context it

was stressed that the responses would be anonymised. The responses given would be

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confidential and that no reference to individuals, companies or specific projects would be

made.

A concern with shaping the questions was that individuals might need to state what they

thought the answer should be, rather than what the actual situation is. Persons may not be

willing to effectively either admit to failures or running their company or project down by

stating that the situation at their company or project was not ideal. Some error in response

was thus anticipated, although it may be offset by having a response pool as large as possible.

Another aspect to guard against this was to frame, in the initial request for the response, that

the responses would help shape the future of the industry and that their matter-of-fact

response would be key to support this initiative.

The questions were designed with the website’s freely provided templates and a hyperlink

was generated by the website that could be used to email the target audience. The greater

majority of the target audience was contacted individually through the linkedin.com website

(A website for professional networking). It was felt that a professional social media platform

would allow;

� Credible contact for the response (i.e. not appear as spam)

� More realistic chances of being viewed (as there is little chance for the message to go

to a spam box and LinkedIn messages tend to be fewer in number than email)

� The questionnaire’s website hyperlink was embedded in the LinkedIn message and

thus allowed convenient access off a mobile handheld device (i.e. the questionnaire

did not require paper hand-outs, printing, postage or faxing)

The questionnaire was submitted on the 28th August 2014 and closed for responses on the 6th

September 2014

In that time 67 responses were received from 102 requests.

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Questions asked – and responses.

In support of the research dissertation questions the following questions were used in the

survey. For the benefit of future research, recommendations for improved questions for future

research are also included based on this research experience.

Question 1

Respondents were asked to pick one entry from four which were Director, Manager, Engineer

or Administrator/Commercial.

Which title best describes your role?

Question Rationale:

The options given were high level, but should have covered all of the roles of the target

audience. The intent with this question was;

• Firstly to present an easy introduction to the questionnaire that would hopefully have

driven further completion of the questionnaire.

• To identify whether there may be grouping of responses by the seniority of the

responders (i.e. those who identify themselves as “directors” may have a wholly

different view to the success of an initiative than those at lower levels within the

organisation).

Question 1 Response:

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Question 2

This question concentrated on Lessons learned questions and had a subset of 9 sub-questions

where respondents were asked to tick a box where five options were given. These were

Strongly disagree, Disagree, Neither Disagree nor Agree, Agree and Strongly Agree. Only

one option could be picked for each sub-question. The nine sub-questions were:

2.1 The Lessons Learned process adds value to the company

2.2 The Lessons Learnt process is implemented properly where I work

2.3 Lessons are routinely learned – as an organisation we genuinely look to

learn from our past mistakes and failures.

2.4 I find that I don’t encounter the same mistake on project after project.

2.5 I see the Lessons Learned process as adding real value to the company

2.6 I actively look to add lessons to the company database

2.7 I see lessons being applied actively, and people keen to not repeat past

mistakes

2.8 The lessons learned process is a key part of my organisation’s strategic

improvement activities

2.9 The lessons learnt process delivers key strategic and competitive benefit

for my organisation.

Question 2 Rationale:

Within a project Management Company the corrective action process within the Quality

management System often is the means through which issues of a minor nature are corrected.

The Lessons Learned however, have in the researcher’s experience, tended to be at a higher,

more strategic level and thus has the potential to have a higher impact on future project

outcomes. Issues raised within the quality management system are typically done so through

a non-conformance report system and addressed within the lifetime of the project.

Issues raised as lessons learned are often recorded for the benefit of future projects as they

may not be rectifiable within the project lifecycle. It was thus deemed important to

understand what the perceptions of construction industry professionals was with regard to the

effectiveness of the lessons learned system at their respective companies and projects.

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The results are shown in tabular form below. Each respondent could pick only one answer per

question. For each question the top number is the percentage respondents and the bottom

number is the number of respondents.

Question

Strongly Disagree

Disagree Neither Agree / Disagree

Agree Strongly Agree

Average Rating


1.49%

2.99%

2.99%

41.79%

50.75%

4.37

1

2

2

28

34


4.48%

47.76%

22.39%

22.39%

2.99%

2.72

3

32

15

15

2

2.3 Lessons are routinely learned – as an organisation we genuinely look to learn from our past mistakes and failures.

2.99%

28.36%

34.33%

22.39%

11.94%

3.12

2

19

23

15

8


22.88%

38.81%

17.91%

14.93%

4.49%

2.37

16

26

12

10

3


0.00%

10.45%

13.43%

31.34%

44.78%

4.10

0

7

9

21

30


3.03%

19.7%

13.64%

45.45%

18.18%

3.56

2

13

9

30

12

2.7 I see lessons being applied actively, and people keen to not repeat past mistakes

4.48%

40.30%

25.37%

26.87%

2.99%

2.84

3

27

17

18

2

2.8 The lessons learned process is a key part of my organisation’s strategic improvement activities

4.48%

26.87%

25.37%

37.31%

5.97%

3.13

3

18

17

25

4

2.9 The lessons learnt process delivers key strategic and competitive benefit for my organisation.

2.99%

23.88%

35.82%

20.90%

16.42%

3.24

2

16

24

14

11

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Analysis of the results

2.1 The Lessons Learned process adds value to the company.

The greater majority of respondents (92.54%) either agreed or agreed strongly that the

lessons learnt process adds value to their company. This is positive as it demonstrates

strongly that people value the process within their companies.

2.2 The Lessons Learnt process is implemented properly where I work.

Only 25 % of the respondents agreed that the process was properly implemented at

their place of work. This is an interesting contrast with the response above, whilst

people value the process the perception exists that it is not properly implemented.

2.3 Lessons are routinely learned – as an organisation we genuinely look to learn

from our past mistakes and failures.

Less than 35% of the respondents felt positively that lessons are genuinely learnt. This

is reflected in the poor response to question 2.4.


Less than 20% of respondents stated that they do not see the same mistakes repeated

on project after project. Whilst the question should have been better worded it does

highlight that issues repeat themselves on large projects. This does call into question

the effectiveness of the current lessons learned programmes. (The question could have

been stated with reference to “major” mistakes that would have focussed on major

things going wrong rather than minor issues occurring, although it could be argued

that if the issues are memorable between major projects then perhaps they were major

issues).

2.5 I see the Lessons Learned process as adding real value to the company.

More than three quarters of the respondents felt that the Lessons Learned process adds

real value to the company, despite a clear sentiment earlier that the process is not

properly implemented and appears to be ineffectual in that some mistakes are

repeated.

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2.6 I actively look to add lessons to the company database.

More than 64% of the respondents in the survey state that they actively seek to add

lessons to the company database. The nature of the answers does reveal what appears

to be an element of bias in the responses in that persons give a generally more

affirmative response when the question is directed at them as individuals and a

generally lower response when the question is directed at the organisation that they

work for.

2.7 I see lessons being applied actively, and people keen to not repeat past mistakes.

Less than 30% of respondents gave a positive response to this question and this raises

real concern about the importance that people within project management organisation

apply to the lessons learned process. The researcher’s expectation was that the phrase

“people keen to not repeat mistakes” should have resulted in a high response for this

question. This is another question where the difference between questions directed at

the respondent’s own perception and those of the wider organisation that they work in

has resulted in a skewed response.


improvement activities.

Nearly of third of respondents (31.35%) of respondents disagreed with this statement

– a very high number. It may well be that the lessons learned process is viewed as a

strategically important element of the organisation but then there is clear disconnect

between what the organisations strategic views are and what the respondents have

stated. It should be noted here that the greater majority of the respondents (over 94%)

are professionals in their organisations and as such the numbers disagreeing is a

surprisingly high number.

2.9 The lessons learnt process delivers key strategic and competitive benefit for my

organisation.

This question garnered a slightly higher average rating (3.24) to the previous question

and demonstrates the sentiment that whilst the lessons learnt process is not viewed as

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a strategic initiative by companies it can (and appears to) deliver strategic benefit to

those companies.

Overall summary of question 2.

It would appear as if people value what the lessons learnt process can add to their

organisation and they see it as an element that adds real value to the organisations that

they work for.

Individuals also gave higher responses for questions that were directed at their own

contribution to the system – as an example the average rating for question 2.6 was

3.56 when asked about their own contribution and for question 2.7 it was 2.84 when

asked about the effectiveness of the programme as a whole.

From the results one can surmise that people are keen to contribute to lessons learned

programmes and that there is real value to be gained from them. However, the

programmes as they currently stand within organisations are not seen to be as

effectual as what they could be.

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Question 3

In relation to the execution of large construction projects which sentence best describes

your experience of project execution?

a) We don’t know why we have problems with quality

b) Is it absolutely necessary to always have problems with quality?

c) Through management commitment and quality improvements we are identifying

and addressing our problems

d) Defect prevention is a routine part of our operations

e) We know that we do not have quality problems


This question was one of two taken from the Quality management maturity grid and is

attempting to gauge the quality management maturity of projects. A consistent response to

this and the other Quality Management maturity grid question may indicate what people’s

perception of quality management in large construction companies is.

Question Response:

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Analysis

The answer option that garnered the highest response was overwhelmingly point 3 –

“Through management commitment and quality improvements we are identifying and

addressing our problems”. This option received 70.15% of the vote.

This indicates clearly that the perception amongst people working in construction and project

management is that the quality management systems are not yet at a fully mature state as this

response indicates that quality maturity within Project Management is at a level of 3 out of 5.

The statement that most of the respondents identified with is one where a management

system exists that functions well with identifying and resolving problems but not one where

problems are routinely prevented, or indeed where there is sufficient knowledge of the project

that the company knows that it does not have problems (the highest level on the quality

maturity index for this question).

(See 6.4 for further reference on the quality maturity grid).

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Question 4

In the last 2 year period I have heard senior management actively discuss the impacts of

the phrase “cost of poor quality”

This question is presented with a “yes” or “no” discrete option.


The intent with this question is to gauge the understanding (within a project environment) of

how often senior delivery managers engage with this topic. It could be that this is something

that senior managers across a variety of companies do discuss, and this would inform that the

company leadership are aware of the wider (hidden) impacts that COPQ often entails. It was

decided to use the particular phrase of “Cost of Poor Quality” in the research exactly for this

purpose, namely that it is an insight into the wider understanding of the phrase, rather than

just a narrow view of the singular cost of a defect. This question also tests the main

hypothesis of this research, namely that COPQ is poorly understood in the management of

large construction projects.


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Analysis

The respondents overwhelmingly identified yes – with 81.25% of respondents identifying

with this question. The question was intended to clarify whether this was specifically in the

context of Juran’s “Cost of poor quality” understanding. The question was not clear in this

regard, though it was still clear that the cost of poor quality is discussed in a lot of

construction project companies, though it is not known what this context was (i.e. it may have

been in a cost of resolution of defects scenario or it may have been in a prevention scenario).

It should be noted that 14.06% of respondents had not heard management discuss the cost of

poor quality and this is perhaps the most noteworthy element from this question. All of the

individuals in the target audience for the questionnaire have worked on mega projects for

longer than five years (some on the same project for that long) and it is surprising that a

percentage of the respondents did not hear management discuss the impacts of poor quality.

This is indicative of opportunities within the construction project management profession to

broaden the impacts of discussion.

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Question 5

Which of these are directly related to poor quality on a project?

a) Defects (whether a component fault or poor workmanship)

b) Transporting something more than it needs

c) Routinely having a huge stockpile in the stores

d) Time spent waiting (whether for people, information, material etc.)

e) Someone spending extra time on something to make sure that it is right.


The intent with this question is to gauge the understanding of Shingo’s classic “seven

wastes”. The responses to this question will describe whether the construction industry in

general understand quality in the broader sense of lean management and as a potential means

to improve project effectiveness through delivering robust delivery mechanisms through

using quality as a strategic approach.


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Analysis of the responses

a) Defects (whether a component fault of poor workmanship)

Two of the respondents did not note defects being a quality issue on projects. This

is surprising as defects (also referred to as snags) are discussed in great detail on a

project and is the one element where the researcher expected a 100% score. This

may be an error in the response or it could be that there is further work to do to

clarify quality matters.

b) Transporting something more than it needs

Nearly 38% of the respondents did not see excessive movement (explicitly stated

as transport in the research question) as being a quality issue. It should be noted

that construction material such as steel, concrete, glass, paving and so forth is

typically of an extremely heavy nature. Thus losses direct to the construction

industry would be any or all of:

� Fuel cost as any movement incurs a significant carbon cost (and associated

financial cost) due to the fuel required to move the material.

� Excessive movement would also take its toll on construction machinery as

they would be in service for longer than is necessary. A reduction in transport

of material would thus have capital expenditure benefits for construction

companies as they would be able to get more productive use out of their

plant.

� Losses to material due to movement – whenever product is moved

(particularly “finished” product such as premanufactured façade panels) then

some loss is due to be incurred as a result of movement damage

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� Safety – The HSE (2013) records demonstrate that approximately ten percent

of construction industry fatalities are as a result of vehicle impacts on

construction sites. Thus, it would appear as if construction worker safety

could be improved by having a reduction in transport and vehicle movements

on site.

c) Routinely having a huge stockpile in the stores

Whilst waiting (delays by another term) are a significant impact on projects it

does also appear as if projects carry huge inventories and that this is not seen as a

quality problem on construction sites. Over 54% of respondents did not feel that it

was a quality issue. Whilst not having supplies is a greater impact it does identify

that there are opportunities for simplifying the system and improving the project

logistics process. (Just-in-time and KANBAN may be of benefit in this regard but

are beyond the scope of this dissertation to explore). It is recommended that

projects understand the nature of delays on construction sites and remedy those

before making wholesale changes to the logistics plan. not understanding (and

mitigating for delays) and having a poor understanding for the resource profile of

the project may lead to further delays and a reduction in the appetite for project

directors to examine further project improvement measures.

d) Time spent waiting (whether for people, information, material etc.)

42.52% of respondents did not feel that waiting is a quality issue. Whilst this is

not a defect as such it is a waste and therefore, within the wider understanding of

quality by taking the seven wastes of lean into account, it is a quality issue.

e) Someone spending extra time on something to make sure that it is right.

The key with this question are the words “extra time”. A person should have

enough time to make sure that the work is right, and any extra time required is

effectively rework, or at the very least the use of resource that should be engaged

on a different part of the project. This “extra time” would be time taken away

from other aspects that the project requires and is thus unproductive time. A clear

majority of respondents – 75.76% - did not feel that this was a quality issue. This

presents a significant opportunity to improve the efficiency of project delivery.

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There may be the tendency among some companies to force personnel to only

spend a certain amount of time on specific tasks before moving them on. This

would likely have the detrimental effect of leaving incomplete work behind,

which may be progressively more difficult to remedy as the project moves on. It

would be far better to understand fully (“Study” in Deming parlance) the issue at

hand and ensure that sufficient means are in place to support the project tasks

being completed in their allotted time.

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Question 6

In relation to project management, Quality is a constraint. (Yes/no)


A voluntary comment field has been added to this question without a request for responses. It

was anticipated that some responders may have wished to add further clarity to their answer

and these answers may thus be of interest to the dissertation.

This question is designed to test the perceptions of personnel within the construction industry

on what their perception of what quality is. The response would be indicative, but not

absolute and may point to a trend developing that could indicate directions for future

research. (It would be preferable to baseline this test with the questionnaires being sent to

persons within the construction industry against a similar sized sample of persons within the

automotive industry – this would then allow a comparison of trends between industries. It is

beyond the scope of this dissertation).


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Analysis of the response

Given that the major project management literature (PMI, APM) describe quality as a

constraint it was interesting to note that only 28.36% of respondents gave a yes response.

Question 7 was given as a text box so that respondents could clarify what their perception of

the quality / constraint situation is and this question needs to be understood in the context of

the responses given in question 7. (The text box had to be formulated as a question as the

software package used did not have the text box functionality for insertion after a question,

only on its own.)

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Question 7 (related to question 6 above)

Whilst this is worded as a question, question 7’s intent was to give an optional text box so

that survey respondents could add some detail if they so wished to their responses in question

6 (about whether quality was a constraint or not).

Some of the text responses are given as follows (responses in italics, analysis in “normal”

text)

“Project management around my organisation is still focused upon time and cost - Quality is

not as easy to identify and measure.”

The response above implies the understanding of quality as a standard (in essence a

completion specification) and not also in the means to deliver a project.

“Competition between time, cost and quality nearly always means quality loses.”

This is a classic response where the “iron-triangle” comes into play. The “old school”

philosophy within construction implies that if there is a trade-off (possibly as a result of “iron

triangle” drawings) and if one aspect needs acceleration then there must be a loser. This

philosophy does not consider the schedule and cost benefits that a quality approach may bring

to a project.

“Quality management is an intrinsic component of project management, as failure to deliver

to quality targets is a failure to deliver the brief. Importantly, quality targets/aspirations etc

need to be established at brief stage”

This respondent raises a valuable point in that quality needs to be understood at brief stage

and the client has a critical role to play in delivering a good quality project. Khan et al (2011)

state the same in describing the “People” grouping of critical success factors. These specific

factors that relate to client factors are End user, Project Owner and Stakeholders Influence.

People talk about quality as being a (the) key driver and is set up properly at the start of a

project but programme always seem to get in the way of delivering 'right first time'.

Some projects appear to get into a situation where the works are rushed to meet the

programme and that “quality” is seen as an opportunity where cuts can be made (to the

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quality process) rather than using quality techniques to provide the acceleration to the

schedule.

If tasks are planned correctly staff will have the time, tools, skills, and materials to achieve a

right first time solution.

Agreed, the investment need to be made into the project to provide this, as well as the

leadership, guidance and support that quality-centric decisions will be supported. Getting the

job done is not as important as getting the job done right and the precedent needs to be set

early in the project that only compliant works will be accepted. If the construction managers

can undermine the quality managers by complaining that an adherence to quality is costing

schedule time then there will not be a great deal of respect for quality. What can occur then is

that works are rushed to meet schedule and then an extensive rework period may be required

as a result of not completing compliant works. This element of rework is where the COPQ

can manifest itself in a big way. The most efficient use of project time then, is to do things

properly the first time so that rework is minimised, the COPQ is minimal and therefore no

schedule time needs to be spent to recover poor quality works. Chasing schedule at the

expense of quality then can result in the project failing on both schedule and quality (and

cost). This should be contrast against concentrating on quality which result in compliant

works being completed without a heavy rework bill that will affect the schedule (and cost).

“Chasing quality” (in a measured and informed manner) can thus deliver both schedule and

cost savings.

Above Yes response based on my last major construction project. But, quality should not be a

constraint, it should be an enabler.

This respondent has clearly had the experience of quality being applied in a narrow means, in

essence the narrow “old school” understanding of quality – presumably as part of the iron

triangle – was applied.

Quality is not a constraint it is a benefit on safety, cost and time, as long as the quality

management tools and philosophy are incorporated into the contract. It must be discussed

and understood at award of contract. Both parties then start with the same intent for success.

This respondent has summarised the intent of this dissertation.

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Question 8

In working on large construction projects I have found that projects are generally

a) Projects are well-ordered with clear communication channels and it is an

environment where generally where people are working efficiently and know

what they are doing.

b) Projects are run with good intentions but poor understanding of delivery and

waste in the process leads to unnecessary wastage, delays and projects end up

being more difficult that what they may need to be. Projects are delivered but

not as well as what could have been.

c) Projects are chaotic and plans (where available) were either ignored or not

necessarily followed. People were not clear about what was required and why

their work was important.

Question 8 Rationale

This question was designed to test people’s perception of how projects are managed.

This question relates to the overall status of a project, not just the particular elements of

lessons learnt of waiting.


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Question 8 Response Analysis

Only 6% of respondents stated that their projects always ran well and a large proportion

(77.61%) stated that their projects were run with good intentions but ultimately were not

delivered as well as what they might have been. The response to this question has a very

similar profile to the response to question 3 (albeit that question 3 has five options to choose

from). In both questions there was a strong response for the middle option.

This indicates that personnel working on projects have the perception that things could be a

lot better. The option chosen is explicit in saying that “poor understanding of delivery and

waste in the process leads to unnecessary wastage, delays and projects end up being more

difficult that what they may need to be”. This would indicate that there is significant

opportunity for improvement in the delivery of large projects.

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Question 9

On large projects overall, enough time is wasted due to waiting to impact the schedule –

whether for people, tools, material, management decisions or information. (This question

was offered with a yes/no response option).

Question 9 Rationale

Whilst defects are routinely seen as a quality issue in construction it was decided to evaluate

the response to a question about efficiency. Waiting is one of Shingo’s classic 7 lean wastes

and this question was designed to determine person’s perception of whether this was a factor

on construction projects.


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Over 77% of respondents stated that enough time is wasted on construction projects to affect

the schedule. The question did not attempt to quantify what the impact is (in terms of actual

time lost) however this is quantified in other research such as Merrow (2011).

This response should be seen in the context of the response to question 5d) where 42.52% of

respondents did not feel that waiting is a quality issue.

It would appear then that there is a significant opportunity for projects to gain advantage

through the reduction of waiting time. The list of COPQ impacts in 4.3 of this dissertation is

significant and many have to do with cost impacts of waiting time and schedules that have

overrun.

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Research conclusion on Problem Statement

In relation to the problem statement made in chapter 2.1 the following research results have

been determined.

The research demonstrated that the understanding of Cost of Poor Quality, as described by

Juran, is poor within the construction industry.

Literature review demonstrates that large construction projects in general suffer from the

impacts of Cost of Poor Quality. This was borne out by the research where, in the opinion of

over 77% of the respondents, enough time is wasted on projects to impact on the project

schedule. Further research of an empirical nature is advised (particularly where the Schedule

and cost Performance Index information for projects can be analysed. This would allow the

quantification of the impacts of COPQ on large projects to be established).

The impacts of the COPQ have been explored in this dissertation, and its understanding

quantified to an extent within a sample of the construction professional community. Further

empirical research is required to adequately demonstrate that better understanding of COPQ.

This is inferred in the research, and it is assumed that a better understanding of COPQ (and

means to mitigate for it) will lead to better project delivery.

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6. STRATEGIES FOR COPQ REDUCTION

The Cost of Poor Quality has a significant effect on project management and the delivery or

construction projects. This cost is often very difficult to quantify and for the most part goes

unrecognised as “business as usual” in the construction management world.

The “cost” element is also far more than just financial. Impacts relate directly to the profit

that a company makes, the usability of the space, the feasibility of the companies involved

(and as a result the job security of its employees) and at its most poignant, the safety impacts

that occur when individuals feel the brunt of quality failures – either directly as a result of

failures or during the work to remediate the issues.

This dissertation will make some recommendations as to how the COPQ and its associated

impacts can be reduced. This is by no means a comprehensive list and there are a myriad of

techniques and methods that may still be employed in the pursuit of flawless project delivery.

Further research on this topic is very much required.

Suggestions for the improved delivery of projects, where the perception exists that their

proper implementation will result in a net reduction of project expenditure are detailed below;

- Lessons Learnt

- Manufacturing in Construction

- Quality as an enabler

- Quality as a strategy

- Lean Construction

- BIM (Building Information Modelling)

6.1 Lessons Learnt

The Lessons Learnt” process is a standard procedure within project management and

construction companies where a formalised activity is held to ensure that “lessons” from what

has gone badly, as well as what has gone well, are captured for future the reference. There are

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several terms used to address the “lessons learnt” process, and Jugdev (2001), states that

these could be any of; knowledge management, after –action reviews, post-implementation

review, post mortem and project debriefing.

Jugdev (2012) states;

“The project management literature describes lessons learned as practices that:

• Is quality improvement oriented and help correct process efficiency and effectiveness

problems in a timely manner (Schindler, 2003; Kotnour, 1999; Kamara et al., 2002;

Koners and Goffin, 2007).

• Help deliver more successful project, improve customer satisfaction (Kotnour, 1999)

and help participants learn about successful and unsuccessful practices (Busby, 1999)

• Involve dissemination and sharing functions (Busby, 1999).

• Involve both inter- and intra-project learnings (Kotnour, 1999) because they assist

with externalizing implicit knowledge (Disterer, 2002).”

The published research on the topic appears to be wholly qualitative in nature, and somewhat

aspirational in its statements in that it makes claims that lessons “help deliver improved

projects” but does not state how this is achieved with the very narrow aspect of the lessons

process that is addressed – namely the recording of lessons

. It is recommended that a future study be conducted that compares the performance of

multiple projects that have a robust lessons learned process in place against those that do not

would be useful. (Comparisons could include client satisfaction surveys, project performance

against forecast baseline, rework rate, COPQ (if quantified in a standardised manner across

projects).

A study of this nature would quantify the outcome on an objective scale, rather than the

subjective nature of feedback from questionnaires.

The PMI (Project Management Institute) is a leading think-tank on project management

matters.

PMI (2010) in Jugdev (2012) states that:

PMI’s PMBOK® (Project Management Body of Knowledge) Guide defines lessons learnt as

“the learning gained from the process of performing the project. Lessons learned may be

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identified at any point. Also considered a project record, to be included in the lessons learned

knowledge base. Jugdev goes on to say that; lessons learned then, are one set of important

project outputs delivered at the end of the project.

Jugdev and the PMI both fail to identify that only recording of lessons has occurred at this

stage, and that lessons learned are only learned once;

• The detail around the occurrence has been fully analysed

• The causes behind the lessons (whether positive or negative) identified

• Knowledge of how the system should be changed is determined

• A measured change is enacted robustly that addresses the issue

Only once this has been implemented will the environment be created where the desired

situation will occur.

Both Jugdev and the PMI refer to lessons learned as an after the fact event near the end of a

project life cycle and don’t state how the recorded lessons will be learnt, nor that the lessons

learned process should form part of the inputs to risk management of current and future

projects. Jugdev and the PMI also only describe the lessons approach as it applies to in-

company lessons and they make no consideration to where else lessons may be collated from.

Buttler et al (2012) also state means by which lessons are “captured” but not how they might

be disseminated effectively to be learnt – rather than just recorded. Herein lies the key, whilst

these lessons are extracted at the end of the project management process – with the intent of

use for future projects, there appears to be little described in the literature in the way of

driving the uptake of lessons within the project management organisation. The “Lessons

Learned” process thus appears to be largely based on recording, and some consideration

should be given to “Lessons Implementation”.

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Figure 6.1. Data, information, explicit knowledge, tacit knowledge and wisdom. (An et al

2010)

It could be argued that according to figure 6.1 above, that lessons, once codified are only in

the data (or the information stage).

This means that the lessons have been recorded and perhaps given some contextual reference

and entered into a system – typically an online archive or spreadsheet – though they seldom

make their way from the recording mechanism to being part of a knowledge uptake for future

projects. In other words, information in an organisation seldom makes the transition from

being explicit to being tacit knowledge and ultimately, becoming wisdom for future projects.

Using Figure 6.1 An (2010) describes the uptake of knowledge in different stages where raw

data is collected first, and then translated into information. This information is then

moderated before being turned into explicit knowledge. It is at this point that the knowledge

is in some form of company database where it is typically accepted that “lessons have been

learnt”. The key consideration should be that this has not yet been taken into cognisance by

people and this process (described as internalisation in Figure 6.1) is where the knowledge

crosses into employee awareness. When this knowledge is fully understood and it is applied

to improve an element of works then it is deemed to be “wisdom”.

Caldas et al (2007) state that only 8% of respondents in a survey of construction companies

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state that their lessons learned program is very effective and also notes that all of these

companies have a formal lessons learned program in place. It should be noted that this is a

subjective response to the question stated and further research – such as the evaluation of

how often an issue reoccurs on successive projects – may give a clearer picture of how

effective a lessons learned program really is.

Why is the lessons learnt process important?

W. Edwards Deming was an American quality pioneer whose Plan-Do-Check-Act work was

instrumental in the development of modern quality management systems. The current ISO

9001 Quality Management system is still based on his quality philosophy.

Lessons Learnt are a key element of the Deming PDCA cycle, and impact heavily on the

Check and Act elements of those cycles. Without the active application of the learning in

place, key opportunities to eliminate causes of non-conformance in the future are lost.

Moen et al (2010) describe how the original “check” element in Deming’s wheel was

misconstrued and that the word “study” was deemed by Deming to be a better description of

what was required. Moen et al (2010) go on to describe how Deming felt that “the English

word “check” means to hold back”. The word check could be misunderstood in the sense of

“inspection” rather than having a detailed ongoing study and analysis of the process.

Figure 6.2 Deming’s PDSA cycle. From Moen et al (2010)

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What is clear that Deming is clear that any changes that should be made to a system should

be made as an informed and measured response. The model for improvement described in

figure 6.2 above askes “How will we know that a change is an improvement?”. This is a valid

point, any change where the impacts are not fully understood might well end up in a worse

situation than what the original issue was.

Suggestions for lessons implementation

A mechanism for ensuring that the lessons in a company database are considered when a new

project is initiated is to ensure that a deliverable is created in the early phases of a project that

requires a lessons learned study and implementation exercise to be conducted. A four part

process could entail:

1) (Plan) Investigation/assimilation of lessons learned

2) (Do) Sorting and codifying of the lessons

3) (Check) Checking that the lessons would be effective

4) (Act) Implementing the lessons

5) (Review) Review the effectiveness of the actions taken

This can be further expanded below:

1) (Plan) Research of lessons

This would entail that research is conducted into any sources of relevant lessons and these

can be:

• In-company lessons from a company lessons learned repository

• Client based lessons learned repositories (Client may sometimes enforce the

consideration of their lessons onto a contracting business to ensure that issues

encountered on previous jobs do not arise again)

• Academic articles, these may be from academic sources or from industry bodies such

as regulators or insurers.

• Media reports into incidents

• Government initiatives

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2) (Do) Sorting of lessons

It is usual that the lessons should be sanitised and checked for veracity by a senior

person within the company who would authorise the lessons for use. This

“moderator” would check that the lesson is recorded in suitable details so that the

persons who would use the lesson have enough information to work with. The

moderator would also check that the lesson is correct in its wording and that the

lesson’s deductions and recommendations are suitable for use. The moderator would

make use of a suitably competent person to verify the lesson content, if they

themselves are not sufficiently competent on the nature of the lesson being described.

The person sorting the lessons should also attempt to present them in a usable way, so

that persons who need to make use of the lessons can find the list of lessons, but also

be able to find the lesson relevant to a particular discipline. (i.e. Lessons Learnt

registers can be large, and an individual may only be looking for - as an example –

lessons related to low voltage storage. The main register of lessons should be

sufficiently well sorted and catalogued so that the relevant lessons can be found in a

user friendly manner.

3) (Check) Checking that the lessons have been effective

Central again to the quality ethos, is the ability to gauge the effectiveness of a

measure taken. A review on a regular basis would be advised so that the effectiveness

of the lessons implemented can be determined. This could be done through;

- Audit

- Customer satisfaction survey

- Engineering review

4) (Do) Implementing the lessons

The implementation of lessons is the crux of the matter. Until such times that the

lessons have been taken up, reviewed and something has been done to mitigate for the

lesson, the lesson is not learnt. Ideally the register of lessons should have a field in

each for each lesson where a description could be written of how the lesson has been

learnt. The responses could then state the applicable response such as; procedure

amended, training given, system simplified –as appropriate. As the lessons learned

may have a significant effect on the execution of certain aspect of project work it is

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advisable that full details of the implementation plan are included in the description of

how the lesson has been learnt. This should be done so that future reviewers may

judge whether the lesson has been productive.

5) (Review) Review the effectiveness of the actions taken

In this step the effectiveness should be evaluated. Deming advocated the “study”

element with regard to the understanding of product realisation processes so the

inference is that this would not but a cursory once off check but an ongoing detailed

analysis of the whole process to monitor its effectiveness.

6.2 Manufacturing in construction

Manufacture (from www.dictionary.com)

Manufacture: the making of goods or wares by manual labour or by machinery, especially on

a large scale.

Manufacturing relates to the transformation of raw materials into a different discrete

component or end product. (As an example steel beams are cut to size and welded together

and then painted to form a ready-made component that requires no further work other than its

connection in situ – essentially “making stuff”).

Assembly (from www.dictionary.com)

Assembly: The putting together of complex machinery, from interchangeable parts of

standard dimensions.

Assembly relates to the connection of various discrete manufactured components into a final

product (As an example manufactured and treated steel beams would be connected together

according to a pre-determined design to form a steel structure – essentially “connecting

stuff”).

Transformation of Automotive manufacturing – a forebear for Construction?

The manufacturing industry has been transformed from having large plants that make the

bulk of their components in-house into assembly lines where off-site manufactured

components are fed into a production line in a systematic manner where assembly of the

different components takes place to deliver the final product.

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The construction industry has been largely confined to the on-site manufacture of the

building (essentially craft style manufacture) rather than leveraging the capability of off-site

manufacture and having an assembly mentality for on-site works.

Many would balk at the principle saying that the manufacture analogy is inappropriate for

construction as there is only one “Gherkin” and only one Crossrail Project and that these are

construction projects that will never be repeated. This is true, however one should consider

that the micro aspects of the construction project (such as piling, glazing, tiling, cabling and

so forth – essentially the production aspects of a project) will be repeated on the next project

and that there are definite manufacturing techniques from the automotive industry that could

be utilised. (The comparison with the automotive interest may be more apt when considering

the development of a new model of car as well as the manufacturing processes required for an

individual car - e.g. the current BMW 5 series model is the “F10” designation and required

significant development before being put into production).

Automotive equivalents Construction equivalents

Off-site

manufacture

Tyres and rubber fittings, seats, electrical

components such as alternators and other

motors, automotive glass

Drywall, raw cement, building services

modules

On-site

manufacture

Chassis panels (in some cases), body panel

treatment such as spray-painting and gluing

Wall building (including so-called “wet

trades” such as plastering and painting),

fire-stopping, piling, concrete pouring,

insulating.

Off-site assembly

In some cases engine assembly is done offsite

from final assembly.

Triple glazing units (glass and extruded

aluminium assembly), valves and motors

On-site assembly

Final assembly of parts into finished

automobile.

Steelwork assembly (where bought as

components), fitting of glazing panels

within assembled frames, connection of

pre-manufactured modules.

Figure 6.2.1 Manufacturing – a comparison between automotive and construction industries.

Whilst it will be exceptionally difficult to remove on-site manufacture totally in large

construction projects it can nevertheless be drastically minimised from the current status quo.

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Presumed advantages of manufacturing approach:

1) Reduction of personnel working on site – this will have immediate benefits in the

reduction of liability and insurance costs and in the provision of welfare and security

facilities.

2) Reduction in congestion of personnel – work sites can be congested with work crews

in the way of other work crews. A reduction of personnel numbers will result in a

subsequent reduction of the risk of congestion occurring.

3) Reduction of complexity of works – with offsite manufacture occurring the onsite

works should be limited in large part to assembly of parts rather than craft style

manufacture.

4) Reduction in transport costs – a reduction may be possible as currently everything for

construction manufacture is transported to site, the works are manufactured and then

the waste is transported off-site again. Potential transport saving may be realised by

eliminating the transport to site and removal of waste. This may be offset somewhat

by the fact that pre-assembled modular may take up more space on transport vehicles

than the individual components.

5) Reduction of co-dependent works – (e.g. reducing the need to wait for the paint to dry

or concrete to cure for follow on works to proceed)

6) Reduction of works in uncontrolled environments – work done in controlled

environments (such as factories) should be more likely to be conform to requirements

as the conditions that the components are made in will be better controlled. (i.e.

painting or concreting in cold temperatures will be reduced)

7) Safety – eliminating safety hazards such as working from height – an example may be

the insulation of ducting in a factory rather than installing the ducting at height and

then insulating it in situ. Insulation off-site would eliminate the working at height

hazard.

Further research in this dissertation will evaluate what benefits the modular approach to

construction may have to large construction projects.

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6.3 Quality as an enabler

Quality is often seen as the inevitable output of the combination of time, scope and cost,

rather than as a proactive driver in achieving benefits to the other factors in the Iron Triangle.

Oisen 1973 (in Atkinson, 1999) describes Project Management as:

Project Management is the application of a collection of tools and

techniques (such as CPM and matrix organisation) to direct the use of a

unique, complex, one-time task within time, cost and quality constraints.

It is clear from this definition that Oisen considers quality as a constraint, and not as an

enabler. Perhaps Oisen is referring to quality in the narrow sense of “standard of

workmanship” in which case a better description for the constraint might be “scope”. Scope

would describe the limitations of the contracted deliverables for the project as well as the

standard of the project (in terms of its functionality and finishes) that are required of the

project. The Oisen constraint for quality is shown in the “typical” iron triangle below:

Figure 6.3.1 – Iron triangle (Figure 1 in Atkinson (1999)).

The Alternate “Iron Triangle” is shown below using Resources, Schedule and Scope as the

three parameters on the triangle.

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Figure 6.3.2 – “Alternate” Iron Triangle Ambler (2012)

The alternate Iron Triangle is that proposed by Ambler (2012) where Scope, Resources and

Budget form a triangle with Quality contained inside the triangle. Again the inference is that

increases in quality are only gained with an increase in resources and time (the scope

presumably remains constant in this case as it should be contractually bound).

Rather it is proposed in this dissertation that quality should be seen as an enabler to project

delivery in that the means to deliver a project with greater efficiency of resources (and

elimination of the causes of project wastage) will be enabled by the robust and early

application of broad-based quality techniques. A broad based application of quality would

entail the adoption of quality as a strategic driver in project delivery with rigorous application

of the quality strategies mentioned above, in the same manner as has already been achieved

(for some decades already) in the automotive industry. Quality in the automotive industry is

seen as a strategic business technique to both reduce the number of defects occurring in the

production process but also to eliminate the waste of process inefficiencies in the

manufacturing process.

This is in stark contrast with the current minimalist and reactive use of quality in current

projects where quality is seen as an overhead that is to be minimised with only the bare

minimum of quality tools applied on a project (often the quality tools applied are only done to

comply with contractual requirements and arguably less - or even no quality management -

would have been applied on the project without the contractual requirements in place).

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6.4 Quality as a strategy

Naidish (2000) states that: Success requires a CEO who remains actively supportive, with

continued high visibility for the effort (of maintaining focus of the reduction of COPQ).

The dependence of the support of top management for the success of quality initiatives is

further evidence by the number of times that “Top Management” is mentioned in the ISO

9001:2008 standard. The phrase is mentioned no fewer than throughout the ISO 9001:2008

standard and is indicative of the requirement that quality should be driven by an

organisation’s most senior leadership. Juran in Titch (1991) stated that “CEOs should make

themselves responsible for establishing quality goals, making sure quality expectations are

included as part of job descriptions and compensation plans, and should personally serve on

company quality councils”.

All companies can be evaluated on the “Quality Maturation Grid” - companies in the

construction sector are no different. The grid describes five different stages in the order of

Uncertainty, Awakening, Enlightenment, Wisdom and finally, certainty against a number of

measurement categories. These categories could be further developed for a company to their

specific requirements, and may be particularly useful if an initiative has been developed that

needs tracking.

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Figure 6.4 - Quality Management Maturity Grid. Crosby (1980).

The research done in this dissertation demonstrated that Quality Maturity within the

construction industry probably falls in the “Enlightenment” category – effectively stage 3 of

5 in the maturity grid. The assumption can thus be drawn that the COPQ in construction

projects could be as high as 12% (based on the “Cost of quality as % of sales” entry from

Figure 6.4 above.

Suggested further steps to enable quality as a strategy would be to;

1) Consolidate the current position of quality within large projects. In particular the need

that problems should be “faced openly and resolved in an orderly way” as described

in Figure 6.4 above.

2) It is suggested that active steps to move to defect prevention be made, this would be

moving to stage 4 where “Defect prevention is a routine part of our operation”. Some

strategies on how this might be achieved are described in the rest of chapter 6.

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6.5 “Lean” Construction

Gao and Low (2014) state that in the UK; the term ‘lean construction’ has become an

established theme, and is promoted as a means to achieve operational improvement (i.e.

quality and productivity) through elimination of waste and maximising value.

Lean construction does promise significant advantages to companies that properly understand

and implement it, and the BIM (Building Information Modelling) approach favoured by large

clients should go some way to ensuring that lean is adopted to some extent within the wider


As suggested by Jørgensen (2008) in Gao (2014) however, Lean Construction is still in its

infancy and has yet to achieve the maturity of other quality philosophy models such as TQM

and Six Sigma.

Lean Construction also, whilst promising to be a powerful driver in better value projects,

does not address all of the quality factors that a company may employ if they were to adopt a

wider view of quality.

Terry et al (2011) describes Lean as:

“a way of thinking and delivering value, innovation and growth by: doing more with less –

less human effort, less equipment, less materials, less time and less space aligning effort

closer to meet customers value expectations at the heart of Lean are flexible, motivated team

members, continuously solving problems.”

Whilst Lean principles have been in use in the wider manufacturing industry for decades it is

still a relatively new concept in construction. Miller et al. (2009) in Thais (2012) state that:

"Lean (in construction) is still in its early adopter phase".

Gao and Low (2014) suggest how lean construction could be modelled much more closely on

the Toyota Production System (TPS), in particular with aligning the 14 points of the TPS to

lean construction equivalents.

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Figure 6.5 – The “Toyota Way”. (Liker (2004) in Gao (2014)).

As a measure of the uptake of lean within the construction industry a survey was done on the

current leading internet job hunting sites (including, www.jobsite,co.uk, www.monster.com

and www.totaljobs.com). The survey looked for how many UK based roles were advertised

that had “lean” in their title and then attempted to identify the industry that the role was being

hired for. This could then give some indication of the uptake within construction. The results

were as per table 6.5.1 below.

Industry Sector Hiring Number of roles

Manufacturing/FMCG 23

IT/Commerce 10

Automotive 8

Unknown (not identified) 7

Utilities 4

Healthcare 2

Construction 0

Figure 6.5.1 Lean related roles hired by UK industry

The results described in the table are an indication that lean is not understood and adopted

widely within the UK construction industry. This may present significant opportunities to

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those companies who are early adopters of the lean construction. Relating the status of lean

construction uptake in the USA Lukowski (2010) states that it has benefitted “construction

firms looking for ways to be more competitive in the wake of the 2008 U.S. economic crisis

are attracted to lean construction as a new model for conducting business”.

6.6 BIM (Building Information Modelling)

The Contractor's Business Management Report 2008 describes BIM as:

“Building information modelling” is not a software product but an approach to designing and

building. BIM also is sometimes referred to as “parametric building modelling” or “virtual

design and construction.”

It allows for a building to be seen as a 4-D or 5-D model with all components included. 4-D

building models would be those where the 3 dimensions of the building are built up

progressively over time, and 5-D would be the same with the added benefit of resource use

(manpower as well as material added). Thus a building model would show construction

sequencing in detail that would allow for planning and error proofing taking place. The

claimed benefits for contractors are that a project model in BIM should enable computerized

take-offs, allow easier drafting of shop drawings, enhance scheduling and sequencing of

tasks, facilitate value-engineering, and provide for identifying design inconsistencies”. BIM

gives the project the ability to deploy Simultaneous Engineering (SE). Tennant et al (1999)

states that the SE approach encourages downstream activities to be pulled forward as long

lead activities within the project plan in essence shortening the critical path as previously

sequential activities can now be done in parallel.

Dave et al (2013) describe four mechanisms for how Lean and BIM interact:

1) BIM contributes directly to Lean goals – Dave et al give the example of clash

detection with 3D building simulation. Clashes can be detected in the design stages

and therefore eliminate rework on site once clashes manifest themselves in the fabric

of the built environment.

2) BIM enables Lean processes and contributes indirectly to Lean goals – Linking the

designed 3D model to time and creating a 4D model empowers collaborative planning

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and certain processes such as scheduling have a much more transparent information

source to work from.

3) Auxiliary Information Systems enabled by BIM – examples of these stated by Dave et

al may be where a carbon footprint analysis model enables planning of the building

sequence – or at least informed decisions that could improve sustainability.

4) Lean processes facilitate the introduction for BIM. Dave et al state that having Lean

as an objective on the project would lead to greater appetite for the introduction and

understanding of tools such as BIM, leading in turn to the betterment of the Lean

execution.

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7. CONCLUSION

Conclusions of the research

Large projects fail, and they fail more often than what they are successful. The nature of their

failure is often catastrophic to their holding companies (and possibly even governments) and

as such there is a real need to understand what means can be applied to wrest success from

what otherwise may be failed projects.

There are several contributory factors to this (most of which are beyond the bounds of this

dissertation), however one contributory factor is the understanding, application and

leveraging of quality philosophies and techniques within the project management profession.

As the research in this dissertation demonstrated, quality within the project management

environment remains poorly understood and at best, partially applied. Several of the quality

techniques and philosophies discussed in this dissertation (such as Cost of Poor Quality,

Lean, Taguchi Cost of Quality and Deming principles) are decades old yet have still not

gained traction within the quality industry.

For this reason the researcher proposes the adoption of “enhanced quality” on large projects

where quality management techniques, philosophies and tools are applied to leverage the best

practice within project management and gain better outcomes for large construction projects.

Some of these tools were described in some detail in this dissertation but there are many more

that the project management profession could avail itself of if it so chooses.

As ever challenges exist with introducing new methods into industry and, like any industry

that is not keen on change, some pushback is expected. There will be those who state that

these techniques aren’t really for the construction industry, or that they don’t see the benefit,

or indeed that things have always been done in a particular way and there is no reason for

further change.

On the subject of Lessons Learnt the responses described a respect for the process and the

appreciation that it can offer significant benefits to the companies that employ it. However

the research response described the situation where the respondents generally viewed their

own contributions to the process as high but not the overall contribution of the company

(effectively their peers). Companies can do more to ensure that lessons are learnt and that a

greater level of support is given to this process within companies.

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On the measure of quality maturity within the construction industry the respondents scored

the industry at 3 out of 5. In essence this demonstrates that there is still much that the

construction industry can learn from other industries and apply. It should also be noted that

the maturity model is nearly 35 years old, and one can assume that much has moved on in

other industries as far as what enhanced delivery mechanisms go. It would appear then, that

there is much that the industry can avail itself in the pursuit of improved project outcomes.

In short a large measure of quality techniques and process efficiency measures in use in other

industries have not yet been taken up by the construction industry. This presents a significant

opportunity to those companies and individuals who gain an understanding for the advantages

that this has to offer and apply those to the construction industry.

There is evidence such as the recruitment profile for different industries (figure 6.5.1) that

industries beyond manufacturing are picking up lean principles and employing them –

utilities, healthcare and IT are key examples. It was notable that there were no construction

project hires in this group and as such it would appear as if the potential benefits to the

construction industry are being lost as a result.

The benefits will not just be felt by the project management fraternity but will benefit society

as a whole. An adoption of enhanced quality systems on construction projects promises that;

� Project disruption will be minimised,

� projects will be completed sooner

� Companies and jobs will be protected as companies don’t suffer crippling costs

associated with poor quality

� Society will benefit as facilities are ready and morale of those working on the sites

and the general public will be improved.

� More poignantly it has promise to make a difference to the approximately thirty

families every year who lose a loved one on British construction sites. For this reason

alone, enhanced construction quality is worth considering.

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Suggestions for further research

An empirical study that compares projects that have had an “enhanced” quality approach

taken could be compared against those where the status quo is the order of the day. (The

status quo here referring to projects where the normal level of quality is utilised on the

project). These projects can then be compared using empirical data (such as the Cost

Performance Index and Schedule performance Index) to see how the projects performed

against plan. This study could also be expanded to evaluate what the customer perceptions of

the buildings or projects were to see how the planned operational expenditure and facility

uptime were in reality to that which was planned.

The safety statistics for projects with an enhanced quality approach could be compared to

those where the status quo is in use. The assumption – to be borne out by empirical testing –

would be that projects where an enhanced quality system is in use may be safer as a result of

more work being done in a controlled, systematic way and the complexities of rework are

reduced or eliminated.

CIRIA, the Construction Industry Research and Information Association champions the

uptake of lean principles within the UK and wider construction industry and have published a

number of guides at www.ciria.org.

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List of Figures Quoted

Figure 1 - Figure 1 from Atkinson, R. (1999). Project management: cost, time and quality,

two best guesses and a phenomenon, it’s time to accept other success criteria. International

Journal of Project Management Vol. 17, No. 6, pp. 337-342

Figure 1.2. – Adapted from Flyvberg, B. (2014) What You Should Know About

Megaprojects and Why: An Overview. Project Management Journal. Volume 45. No 6.

April/May 2014. Pp 6-19

Figure 2 – “Alternate” Iron triangle. Ambler S. 2006.

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Figure 2.1 – The performed research process. Thomasson et al. (2013). Cost of Poor Quality;

definition and development of a process‐based framework. Chalmers University of

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Technology. Report No.E2013:026

Figure 3a - Atkinson, R. (1999). Project management: cost, time and quality, two best

guesses and a phenomenon, it’s time to accept other success criteria. International Journal of

Project Management Vol. 17, No. 6, pp. 337-342 and Alternate” Iron triangle. Ambler S.

2006. http://www.ambysoft.com/essays/brokenTriangle.html (Accessed July 2014)

Figure 3 - Mikkelsen, H. (1990). Quality of Project Work and Project Management.

International Journal of Project Management, ISSN 0263-7863, Vol 8, Issue 2, pp 138 - 143

Figure 3.1 - Seawright, K. Young, S (1996) A Quality Definition Continuum Interfaces, Vol.

26, No. 3 (May - Jun., 1996), pp. 107-113

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Cost of Quality.

http://qimpro.com/blog/ournational_pastime_problems/ (Accessed September 2014)

Figure 3.5 – COPQ as estimate of sales (Defeo 2005).

www.juran.com/elifeline/elifefiles/Articles/COPQ%20Research.pdf (Accessed Feb 2014).

Figure 5 - Juran’s cost of quality model (1988). Juran, J. M (1988). Juran's quality control

handbook. 4th edition. McGraw-Hill. ISBN 0070331766, 9780070331761

Figure 6.1 - An, M., & Ahmad, H. S. (2010). Knowledge Management in Construction

Projects: A Way Forward in Dealing with Tacit Knowledge. International Journal of

Information Technology Project Management (IJITPM), 1(2), 16-42.

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Figure 6.2 – Moen, R. Norman, C. (2010) Circling back. Quality Progress. November 2010.

Pp22-18

Figure 6.2.1 Manufacturing – a comparison between automotive and construction industries.

Figure 6.3.1 – Atkinson, R. (1999). Project management: cost, time and quality, two best

guesses and a phenomenon, it’s time to accept other success criteria. International Journal of

Project Management Vol. 17, No. 6, pp. 337-342.

Figure 6.3.2. - Ambler, S. (2012). http://www.ambysoft.com/essays/brokenTriangle.html

(Accessed July 2012)

Figure 6.4 - Quality Management Maturity Grid. Crosby, P. (1980). Quality is Free. McGraw

Hill. ISBN 978-0451625854

Figure 6.5 – The “Toyota Way”. (Liker (2004) in Gao (2014)). Gao, S., Pheng Low, S. (2014)

The Toyota Way model: an alternative framework for lean construction. Total Quality

Management & Business Excellence. Vol. 25, Iss. 5-6, 2014

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9. APPENDIX 1 – QUESTIONNAIRE

Question 1

Which title best describes your role?

Respondents could pick one only from the predefined titles; Director, Manager, Engineer or

Administrator / Commercial.

Question 2

This question concentrated on Lessons learned questions and had a subset of 9 sub-questions

where respondents were asked to tick a box where five options were given. These were

Strongly disagree, Disagree, Neither Disagree nor Agree, Agree and Strongly Agree. Only

one option could be picked for each sub-question. The nine sub-questions were:



2.3 Lessons are routinely learned – as an organisation we genuinely look to learn

from our past mistakes and failures.




2.7 I see lessons being applied actively, and people keen to not repeat past mistakes


improvement activities

2.9 The lessons learnt process delivers key strategic and competitive benefit for my

organisation.

Question 3

In relation to the execution of large construction projects which sentence best describes

your experience of project execution? (Respondents could pick one only).

a) We don’t know why we have problems with quality

b) Is it absolutely necessary to always have problems with quality?

c) Through management commitment and quality improvements we are identifying

and addressing our problems

d) Defect prevention is a routine part of our operations

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e) We know that we do not have quality problems

Question 4

In the last 2 year period I have heard senior management actively discuss the impacts of

the phrase “cost of poor quality”

This question is presented with a “yes” or “no” discrete option.

Question 5

Which of these are directly related to poor quality on a project? (Respondents were asked

to pick all of those that apply).

d) Defects (whether a component fault or poor workmanship)

e) Transporting something more than it needs

f) Routinely having a huge stockpile in the stores

g) Time spent waiting (whether for people, information, material etc.)

h) Someone spending extra time on something to make sure that it is right.

Question 6

In relation to project management, Quality is a constraint. (Yes/no)

Question 7

Comments (optional) about whether quality is a constraint.

Question 8

In working on large construction projects I have found that projects are generally;

(Respondents could pick one).

a) Projects are well-ordered with clear communication channels and it is an

environment where generally where people are working efficiently and know

what they are doing.

b) Projects are run with good intentions but poor understanding of delivery and

waste in the process leads to unnecessary wastage, delays and projects end up

being more difficult that what they may need to be. Projects are delivered but

not as well as what could have been.

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c) Projects are chaotic and plans (where available) were either ignored or not

necessarily followed. People were not clear about what was required and why

their work was important.

Question 9

On large projects overall, enough time is wasted due to waiting to impact the schedule –

whether for people, tools, material, management decisions or information. (This question

was offered with a yes/no response option).

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10. LIST OF ABBREVIATIONS

APM - Association of Project Management

ASQ - American Society for Quality

BIM - Building Information Modelling

CDM - Construction and Design Management (The CDM Regulations 2007)

CIRIA - Construction Industry Research and Information Association

CPM - Critical Path Method

CQI - Chartered Quality Institute

COCE - Cost of Capital Employed

COPQ - Cost of Poor Quality

COGQ - Cost of Good Quality

COQ - Cost of Quality

GDP - Gross Domestic Product

HSE - Health and Safety Executive

JIT - Just In Time

PDCA - Plan, Do, Check, Act (Deming Cycle)

PMI - Project Management Institute

QMS - Quality Management System

RCA - Root Cause Analysis

SE - Simultaneous Engineering

TIC - Total Installed Cost

TPS - Toyota Production System

UK - United Kingdom

WBS - Work Breakdown Structure

The impact of Cost of Poor Quality on Project Management

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